Working
together
Engineering Infrastructure
for a sustainable future
Renew Holdings plc Annual Report and Accounts 2021
Highlights
Group revenue1
Full year dividend per share
£791.0m
2020: £620.4m
16.00p
2020: 8.33p
2021
2020
2019
791.0
2021
2020
2019
620.4
600.6
16.00
8.33
11.50
Adjusted operating profit1
Adjusted operating margin1
£51.2m
2020: £39.6m
6.5%
2020: 6.4%
2021
2020
2019
51.2
2021
2020
2019
39.6
38.3
6.5
6.4
6.4
A strong set of results
Our differentiated and resilient business
model has delivered strong results.
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 30 to these accounts.
Expansion in the water market
We have expanded in the water market
with the acquisition of J Browne.
Read more online at
www.renewholdings.com
Strategic report
Governance
Financial statements
60 Board of Directors
64
Statement of corporate
governance
72 Audit and Risk Committee report
75 Nomination Committee report
77 Directors’ remuneration report
85 Directors’ report
88
Statement of Directors’
responsibilities
IFC Highlights
At a glance
2
4 Working together
Environment
4
6 Social
8 Governance
Investment case
10
12 Chairman’s statement
14 Chief Executive’s review
19 Section 172(1) statement
20 Our business model
22 Our stakeholders
26 Our strategy
28 Key performance indicators
30 Operational review
39 Financial review
42 Our culture
44 Sustainability
56 Risk management
Independent auditor’s report
89
94 Group income statement
Group statement of
95
comprehensive income
Group statement of changes
in equity
95
96 Group balance sheet
97 Group cashflow statement
98 Notes to the accounts
130 Company balance sheet
Company statement of
131
comprehensive income
Company statement of
changes in equity
131
132 Notes to the Company accounts
143 Directors, officers and advisors
144 Shareholder information
145 Our subsidiary businesses
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Working
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Engineering Infrastructure
for a sustainable future
Our purpose
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.
Our vision
To safely and responsibly deliver essential
engineering services to the country’s key
infrastructure assets.
Renew Holdings plc Annual Report and Accounts 2021
1
At a glance
Delivering essential
infrastructure
services
We operate on some of the country’s most challenging infrastructure networks
directly delivering day-to-day engineering support services.
Employees
3,696
2020: 3,338
Order book
£749m
2020: £692m
Engineering Services
Rail
As a major provider of infrastructure services to the
rail network 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 we deliver a range
of services including civil asset management, fencing,
devegetation, drainage and electrification services.
Infrastructure
We deliver specialist engineering services across
the strategic highways network predominantly to
National Highways through a number of asset
delivery framework agreements. Services include
infrastructure civils, specialist drainage, lighting
and electricals. We also undertake all aspects of
wireless telecoms network infrastructure delivery.
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
to UK thermal power generation plants.
Environmental
We support our water clients by directly delivering
asset maintenance and renewals across water
infrastructure networks including flood alleviation
and river and coastal defence schemes. We also
specialise in undertaking complex remediation
schemes for our clients.
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Renew Holdings plc Annual Report and Accounts 2021
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Working
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Acquisition
J Browne
J Browne is a water-focused engineering services
business based in London and operating throughout the
South of England.
J Browne delivers multidisciplinary infrastructure services
through a number of long-standing framework agreements,
across all disciplines in the water sector.
The acquisition represents an excellent strategic fit, adding
material scale to Renew’s water business and bringing new
water clients into the Group including Thames Water,
Southern Water, Affinity Water and South East Water.
Employees
211
J Browne acquisition
£29.5m
Our values in action
Read more about our values
on page 20
Specialist Building
Our subsidiaries
High Quality Residential and Science
Operating in London and the Home Counties, we are
a market-leading provider of luxury prestigious private
residential refurbishment schemes where we specialise
in extensive temporary works, often underground. In the
science sector, we have a number of frameworks to build
and refurbish scientific facilities.
Read more about our business model
on pages 20 & 21
Read more about our operations
on pages 30–38
Renew Holdings plc Annual Report and Accounts 2021
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Working together – environment
Using technology
to reduce our
carbon footprint
New technology
Carnell’s High Density Array Ground Probing Radar
(“HDAGPR”) surveys were shortlisted for the “Best Use of New
Technology in the Highways Industry” category at the 2021
Highways Awards.
Carnell teamed up with a geospatial survey specialist partner
to pioneer the use of HDAGPR technology on the strategic
road network. This innovative technology improves the
information on underground services to enhance road
worker safety.
Reducing our footprint
Carnell has trialled Green D plus hydro-treated vegetable
oil (“HVO”) fuel to power lighting equipment and the site
compound on an M6 central reserve barrier upgrade project
for National Highways.
Carnell plans to expand its use of renewable fuel to power
its projects in the future after the scheme reduced its CO2e
emissions by around 90%. The scheme, which spanned 6km,
saved the equivalent emissions of three average cars running
for a year.
Read more about our carbon reduction
initiatives on pages 48 & 49
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Renew Holdings plc Annual Report and Accounts 2021
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Working
together
Measuring our carbon
reduction initiatives
At the end of 2020 we introduced a number
of targets across the Group aimed at measuring
our progress in reducing our carbon footprint.
During the year, our subsidiary businesses have
been required to work towards carbon reduction
initiatives including moving to an 80% low carbon
commercial fleet by 2030 and developing a
programme to install electric vehicle charging
points at all the Group’s main office locations
by the end of 2021.
As a Group, we are committed to ensuring
all electricity used is derived from 100%
renewable tariffs by 2022.
Read more about how we are
reducing our carbon emissions
on pages 48 & 49
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
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Innovation at work
AmcoGiffen has developed a bespoke attachment to assist
with its rail tunnel cleaning operations. The self-contained
system incorporates an industrial vacuum to collect detritus
for safe disposal, removing potentially harmful contaminants
before our people enter the work site.
The technology protects the environment and ensures our
employees are able to work safely as well as reducing costs
and protecting the environment.
Cutting emissions
At Birkenhead Park Station, as part of a wider “Access for All”
programme being undertaken by Merseyrail, AmcoGiffen has
introduced a Solartainer. Solar panels generate electricity to
power batteries with the aid of a HVO-fuelled generator. The
generator turns off when there is sufficient power to run the
site. A significant reduction in fuel consumption was achieved
by running mainly on solar power. The use of this technology
reduces carbon emissions, improves air quality and reduces
noise pollution for our neighbours.
Working together – social
Building
relationships
with local
communities
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Renew Holdings plc Annual Report and Accounts 2021
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Working
together
Working with the
local community
Supporting the communities in which we operate is vital
to maintaining positive relationships and ensuring the
successful delivery of our work. Our businesses engage
with, and support, those communities in which they work,
playing their part in creating a better society.
During the year our employees undertook “volunteering days”
alongside fundraising activities for a range of charities.
Schools
Dedicated to bridging the skills gap and raising awareness
of engineering as a career, our businesses participated in
numerous school-based activities and training days during
the year including interactive employability panels,
workshops and various engagement events.
During the year a team from QTS worked with Farsley Farfield
Primary School in Leeds to transform its outdoor space into
a haven for children with social, emotional or mental
health needs.
Customer facing
Our customer liaison and planning teams ensure that
stakeholder management plans are delivered effectively
through timely, proactive communication with all stakeholders.
The teams endeavour to improve the levels of customer
satisfaction in the course of their work. In our highways
business, we employ a “Think Customer” culture
and support the Institute of Customer Service’s
“Service With Respect” campaign.
Read more about how we engage with
our customers on pages 46 & 47
Teamwork
Leaving a legacy
Whilst carrying out work to replace the lock gates
on the Crinan Canal on behalf of Scottish Canals,
the team at AmcoGiffen recently installed a
defibrillator for the community on behalf of the
Community Heartbeat Trust.
The defibrillator was installed at Cairnbaan in
Argyll and Bute on the West Coast of Scotland
and was arranged by local residents in conjunction
with the charity. The defibrillator gives a high-
energy electric shock to the heart of a person
in cardiac arrest.
The defibrillator has been fitted in an old unused
phone box making it even more special and it is
now fully operational for the community to use.
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
7
Working together – governance
Acting
responsibly
to deliver
sustainable
value
Internal controls
The Directors have overall responsibility for the Group’s system of
internal control and for reviewing and monitoring its effectiveness.
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.
The Group undertakes an annual strategic planning and budgeting
process to review all aspects of the business. The Strategic Plan
and budget are considered, challenged and approved by the Board.
Succession planning
Continuity of leadership is recognised as a critical factor in the
sustainability of the business. The Board carries out an annual
review of succession planning at both Board and subsidiary
business management level as part of its strategic planning and
budgeting process.
Read more about how we
manage risk on pages 56–59
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Renew Holdings plc Annual Report and Accounts 2021
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Working
together
Site visits
Our safety, health, environmental and quality advisory team
undertook 2,477 site visits during the year. Site management
from across the Group undertook a further 2,424 visits.
Our responsibility on site
Our site teams understand the importance of ensuring they
carry out their operations responsibly considering all our
stakeholders. We seek to leave a lasting positive legacy from
our work. Engagement with communities, schools and local
people is a feature of the work we undertake.
After Covid-19
We continue to review our Covid-19 procedures to ensure we
are following Government guidance on how to operate safely.
Strictly enforcing these precautionary measures means our
employees can carry on supporting critical UK infrastructure
networks with confidence.
Site visits
4,901
2020: 4,362
Read more about our health
and safety on page 50
Safety is our priority
The Board continues to place safety at the top
of its agenda and reviews the Group’s safety
performance monthly. The Group’s Accident
Frequency Rate during the year was 0.14. For
FY22, the Group will move to a Lost Time Incident
Frequency Rate measure which provides a more
detailed view of safety performance in our business.
The Group’s Safety, Heath, Environmental and
Quality (“SHEQ”) Director oversees health and
safety across our business, supported by a team
of safety advisors based within the individual
subsidiary businesses.
Sharing knowledge and best practice is key to
improving our safety performance and the Group
hosts safety events throughout the year supported
by external advisors as necessary on topics which
relate to the Group’s safety focus areas.
Read more about our health and safety
on page 50
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
9
Investment case
Delivering
long-term value
Differentiated
low-risk
business model
High-quality
value-accretive
compounder
Our subsidiary businesses operate
across a diversified range of markets.
We undertake critical asset
maintenance and renewals services
that are not dependent on large,
capital-heavy contract awards,
providing a lower risk profile.
We have a proven history of shareholder
value creation through consistent
execution of our strategy to deliver
reliable capital growth.
We have a track record of organic growth
and M&A in high-margin, high-growth
end markets, twinned with strong cash
generation and shareholder returns.
Exposure to
attractive long-term,
non-discretionary
structural growth
drivers
We operate in markets underpinned by
resilient, long-term growth dynamics and
committed regulatory spending periods,
with maintenance and renewals
expenditure continuing to increase.
We deliver the day-to-day renewal and
maintenance tasks required to keep critical
networks operational.
Our strategic areas of focus
Adjusted EPS1
Frameworks in regulated markets
5
50.51p
200+
Read more about our strategy
on pages 26 & 27
Read more about our
operations on pages 30–38
Read more about our KPIs
on pages 28 & 29
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 30.
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Renew Holdings plc Annual Report and Accounts 2021
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Working
together
ARQ delivering decarbonisation
ARQ is a collaboration of Renew subsidiaries AmcoGiffen, REL
and QTS and provides an integrated, self-delivery model for the
UK rail network. Individually the businesses have been enabling
electrification programmes across the UK for several years.
Combining their respective strengths will help us to collectively
support essential UK infrastructure while gaining a key
competitive edge.
Decarbonisation is a huge challenge over the next 30 years.
To decarbonise the UK rail network completely, 13,000 single
track km (approximately 450km per year) will need to be
electrified by 2050 to achieve net zero.
By forming ARQ, we will be well positioned to help to meet
the ambitious electrification and decarbonisation targets set
by the Government and Network Rail.
Our values in action
Read more about our values
on page 20
Market-leading
position, expertise
and capabilities
Ideally poised to
benefit from green
infrastructure
investment
Strong long-term
growth prospects
Our businesses work in markets with high
barriers to entry which demand a highly
skilled, experienced workforce and a
proven track record of safe delivery.
We continue to develop our range of
specialist skills enabling us to provide
a more efficient and valuable service
to our clients.
Our purpose-led ESG approach enables
us to add value to our customers through
investment in innovation and technology,
assisting in the delivery of the UK’s net-zero
carbon target by 2050.
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 capital allocation and risk.
Highly skilled workforce
Company car schemes with
3,696
electric/hybrid option
100%
Adjusted EPS1 growth over last
5 years
84%
Read more about employee
engagement on page 23
Read more about our carbon
reduction on pages 48 & 49
Read more about our risk
management on pages 56–59
We have a proven history of shareholder value
creation through consistent execution of our
strategy to deliver reliable capital growth.
Renew Holdings plc Annual Report and Accounts 2021
11
Chairman’s statement
Continued strong
performance
Dear Shareholder
Introduction
The Group is pleased to announce a record financial performance,
with continued growth in revenue and profit and strong operating
cash generation, which reflects the core strengths of the Group
and our well-established positions in attractive and sustainable
growth markets as well as the resilience of Renew’s business model.
In addition to good organic growth, the Group continued to make
strategic progress during the year, expanding our presence in the
water market with the acquisition of Browne, a respected provider
of specialist engineering services across the water infrastructure
network. We also acquired REL, a specialist provider of rail
overhead line electrification, in order to support the Government’s
rail decarbonisation programme.
Differentiated business model
Our differentiated business model and the services we provide
continue to support key infrastructure assets in regulated markets.
Our markets enjoy committed funding which provides visible,
reliable and resilient revenues via long-term programmes. We
deliver non-discretionary maintenance and renewals tasks and
have little exposure to the financial and contractual risks of larger
enhancement schemes. Operating in complex, challenging and
highly regulated environments, our markets have high barriers to
entry and we directly employ a highly skilled workforce which
enables us to be extremely responsive to our clients’ needs.
Results
Group revenue1 increased to £791.0m (2020: £620.4m) with
adjusted operating profit1 increasing to £51.2m (2020: £39.6m)
and an adjusted1 operating margin of 6.5% (2020: 6.4%). Statutory
operating profit was £41.1m (2020: £32.9m). The adjusted EPS1 was
50.51p (2020: 41.22p) and basic earnings per share was 38.73p
(2020: 26.78p). The Group had a net debt1 position of £13.7m
(2020: net cash £0.3m), in line with our expectations.
Dividend
The Group’s strong trading performance, cash position and
positive outlook give the Board the confidence to propose a final
dividend of 11.17p (2020: 8.33p) per share, an increase of 34 per
cent. This will be paid on 4 March 2022 to shareholders on the
register as at 28 January 2022, with an ex-dividend date of
27 January 2022. This will represent a full year dividend of
16.0p (2020: 8.33p) per share.
David M Forbes
Chairman
We expanded our presence
in the water market with
the acquisition of Browne,
a company that delivers
specialist engineering
services across the water
infrastructure network.
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 30.
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Renew Holdings plc Annual Report and Accounts 2021
People
Our employees are critical to the continued success of the Group
and the Board would like to sincerely thank all its employees for
their ongoing dedication and hard work.
Safety
Our priority remains to ensure both the safety of our workforce
and continued delivery of essential renewal and maintenance
operations. The Group’s culture of robust governance, risk
management and a focus on health and safety has together
provided a strong platform from which we have been able to
continue to operate over the last twelve months whilst delivering
uninterrupted services for our customers.
ESG
Environmental
We understand the role we must play as a business in taking
action to address the emissions we produce. We are committed to
achieving net zero by no later than 2040, ahead of the 2050 target
date set by the government.
We are pleased to maintain our London Stock Exchange’s Green
Economy Mark which recognises those companies that derive
more than 50 per cent of revenue from products and services
that are contributing to environmental objectives. Renew plays
an important role in helping to achieve government aims for
greater sustainable infrastructure.
Social
As a business we strive to leave a lasting positive impact in the
work we undertake. During the year our businesses have engaged
with local schools and education providers, supported their local
communities and undertook a range of charity events.
Governance
As a Board, we are responsible for ensuring the effective
application of high levels of governance within our business,
balancing the interests of all our stakeholders. As a minimum,
the Group complies with the QCA Corporate Governance Code,
more details of which can be found in the corporate governance
section of the Group’s website.
Risk management is led by the Board, which reviews the Group’s
risk profile on an ongoing basis alongside the Audit and Risk
Committee. Subsidiary management teams are responsible for
the effective embedding and monitoring of the Board’s agreed
risk management protocols and the Executive Directors provide
regular updates to the Board on the principal risks and controls
across the Group.
Further details of the Group’s ESG progress and strategy are set
out on pages 44 to 55.
Board changes
At the same time as our annual results, we announced the
appointment of Louise Hardy as a Non-executive Director. Louise
will augment the breadth of skills and experience on the Board as
the Group continues to grow. Further details of Louise’s experience
are included in that announcement and in the Directors’ report on
pages 85 to 87.
Having served on the Board for just over ten years and in
accordance with best practice, I have decided that it is time to
step down as Chairman and from the Board. I have worked with
my fellow Directors to identify the skills and experience required of
a prospective Chairman and the Board has undertaken an exercise
to find my replacement. That exercise is largely complete and the
Board remains confident that this process will conclude in the new
year and that a strong candidate will be appointed.
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At the request of the Board, I have agreed to remain as Chairman
until that appointment is finalised which I expect to be no later
than spring 2022, at which point I will step down from the Board.
In accordance with the Group’s normal rules, a resolution
approving my re-election as a Director will be put to shareholders
at the forthcoming Annual General Meeting. On the basis that this
is only for a short transitional period, I hope that the shareholders
will vote in favour of these arrangements.
I have been fortunate to serve on this Board during a time of
substantial growth in profitability and shareholder value. In most
part this has been down to an exceptional, focused and diligent
management team, past and present, who have implemented
sound strategic thinking aimed at looking after the interests of all
stakeholders including employees, shareholders, creditors and
pensioners. I am proud of what has been achieved over my time
with the Group.
Future focus
The Group is supported in the delivery of its long-term strategy
through effective relationships with our directly employed
workforce, customers, suppliers, shareholders, and wider
stakeholders and these are critical to the continued success of
the business. Building on our track record of consistently creating
shareholder value we will continue to deliver our strategic priorities
whilst focusing on our environmental, social and governance
responsibilities. Our approach to equality, diversity and inclusion
will also be a focus area as we move through 2022 and beyond.
The Board expects to continue to deliver growth, both
organic and through strategic earnings-enhancing acquisitions.
We remain focused on markets with high barriers to entry and
where non-discretionary spending programmes exist to maintain
critical infrastructure. Our differentiated business model and the
reliable long-term nature of the UK infrastructure markets give the
Board continued confidence in the Group’s future and the
significant growth opportunities ahead.
David M Forbes
Chairman
9 December 2021
Working
together
Communicating
with our
stakeholders
Our subsidiary businesses
undertook a range of client
satisfaction surveys during the year.
Improving our understanding of
our clients helps ensure we remain
closely aligned with their
requirements and future
ambitions.
Read more about our
stakeholder engagement
on pages 22–25
Renew Holdings plc Annual Report and Accounts 2021
13
Chief Executive’s review
Building
on positive
momentum
Dear Shareholder
Introduction
The Group’s impressive outperformance over the year reflects the
underlying qualities and differentiated nature of our high-quality,
low-risk business model combined with the strong demand we
have seen in our chosen end markets as the UK’s infrastructure-led
economic recovery gathers pace.
At Renew, we are committed to delivering engineering infrastructure
solutions for a sustainable future. We perform a critical role in
keeping the nation’s infrastructure functioning efficiently and
safely as a leading provider of essential maintenance and
renewals-led engineering services, operating in regulated
markets including rail, highways, mobile telecommunications,
civil nuclear, water and environmental.
As part of the UK Government’s pledge to level up the economy
and reach net-zero carbon emissions by 2050, it has committed
to a record £650bn2 investment in transforming the UK’s
infrastructure and we are already benefiting from an increased
focus on maintaining and renewing assets as part of this shift.
Renew has a vital role to play in supporting the green and
sustainable infrastructure of the future and we have made good
progress on our own sustainability targets this year.
Once again the Group demonstrated its resilience during the year,
where two national lockdowns had no material impact on trading.
This highlights Renew’s ability to deliver consistently, thanks to our
differentiated business model, the critical nature of our work and
the committed, long-term, highly visible spending cycles that
underpin our end markets.
We delivered a further improvement in organic growth, which,
combined with our robust balance sheet and strong cash
generation, gives us the firepower and flexibility to invest in
selective value-accretive M&A opportunities. During the period,
we acquired J Browne, a water-focused engineering services
business based in London, which strengthens our exposure to the
£51bn3 water sector, bringing new clients into the Group, including
Thames Water, Southern Water, Affinity Water and South East
Water. Our wholly owned subsidiary, QTS Group Limited, acquired
Rail Electrification Limited (“REL”) which complements Renew’s
existing rail offering and enables the Group to support the
Government’s commitment to a net-zero rail network by 2050.
Paul Scott
Chief Executive
The Group’s impressive
outperformance over the year
reflects the underlying qualities
and differentiated nature of our
high-quality, low-risk business
model, combined with the
strong demand we have seen
in our end markets as the UK’s
infrastructure-led economic
recovery gathers pace.
For references please see page 18.
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Working
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Our core values
Our core values of compliant, reliable, responsive,
considerate, sustainable, progressive and integrity
are communicated across our business and
underpin everything we do.
Read more about our core values
on page 20
As we reflect on another successful performance and look to the
future with confidence, underpinned by our strong order book, I
would like to place on record my gratitude, on behalf of the Board,
to all our dedicated colleagues who made these results possible
by delivering an uninterrupted, highly responsive service for
clients at all times.
Renew’s strengths
Renew has a number of core strengths which provide distinct
competitive advantages in our chosen markets and leave us
well placed to build on our strong track record of long-term
value creation:
• The health, safety and wellbeing of our people remains our
number one priority and we have implemented safe working
practices for the Group’s employees.
• We operate a differentiated, diversified, low-risk, low-capital
operating model, providing critical asset maintenance and
renewals services that are not dependent on large, high-risk,
capital- intensive contract awards.
• Our directly employed workforce enables us to provide a more
efficient and valuable service to our clients, reducing our
exposure to sub-contractor pricing volatility and being able
to deliver extremely responsive solutions.
• Our businesses are well established in complex, challenging
and highly regulated markets with significant barriers to entry,
which demand a highly skilled and experienced workforce
and a proven track record of safe delivery.
• We work in markets underpinned by resilient, long-term growth
dynamics and highly visible, reliable, committed regulatory
spending periods, providing predictable cashflows.
• We have a proven track record of sustainable value creation,
reliable revenue growth and strong returns on capital thanks
to our highly cash generative earnings model and clearly
defined strategy.
• We are committed to growing the business both organically
and through selective complementary acquisitions while
maintaining a disciplined approach to capital allocation and
risk underpinned by a strong balance sheet.
• Our high-quality model of compounding earnings through
the redeployment of internally generated cashflows enables
us to execute on our strategy of delivering reliable and
consistent growth for all our stakeholders.
• We have strong relationships in place with all our stakeholders,
from our workforce to our customers, suppliers, communities
and shareholders.
Compelling market drivers
Our businesses are exposed to attractive long-term, non-
discretionary structural growth drivers. Increasing demand for the
maintenance and renewal of existing UK infrastructure is driven
by a number of factors including:
• a commitment by the Government to level up the economy
by investing £650bn2 in a green infrastructure-led recovery,
two-thirds of which will be in the transport and energy sectors,
with fiscal stimulus measures likely to flow through to lower cost
infrastructure maintenance programmes ahead of larger, more
capital-intensive enhancement schemes;
• greater focus on sustainability and climate change as part of
the UK’s target of reaching net-zero carbon emissions by 2050,
together with flood risk prevention measures and investment in
nuclear projects, renewables and electrification programmes;
• population growth increasing the pressure on housing, energy,
water and demand for natural resources;
• technological innovation driving a shift towards digital roads,
smart cities and the transformation of transport and
telecommunications networks; and
•
increased Government regulation to improve safety, efficiency
and resilience of key infrastructure assets leading to more
demanding maintenance, renewal and upgrading requirements.
Our track record of growth and long-term
value creation
Renew has a strong track record of sustainable value creation
through the economic cycle thanks to the Group’s high-quality,
value-accretive compounding earnings model. Over the past five
years, we have delivered:
• adjusted1 earnings per share growth of 84 per cent;
• an increase in our adjusted1 operating margin from 4.2 per cent
to 6.5 per cent;
• group revenue growth of 50 per cent; and
• five acquisitions supported by our strong free cash flow.
Our track record of reliable revenue growth and cash generation
has resulted in our ability to deliver highly predictable, consistent
organic earnings growth as well as funding for the acquisition of
complementary businesses that meet our strategic requirements.
Renew Holdings plc Annual Report and Accounts 2021
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Chief Executive’s review continued
Results overview
During the period, Group revenue increased to £791.0m (2020: £620.4m),
with organic growth of 19% and the Group achieved an adjusted
operating profit of £51.2m (2020: £39.6m). Adjusted operating
profit margin was 6.5% (2020: 6.4%). As at 30 September 2021, the
Group had pre-IFRS 16 net debt of £13.7m (30 September 2020:
net cash £0.3m), reflecting the acquisition of J Browne and REL
along with the Group’s strong operating cash generation and
conservative approach to gearing.
These results include contributions from both J Browne and REL,
acquired in March 2021 and May 2021 respectively. Both
businesses have performed in line with management expectations
and are integrating well. Underpinned by long-term framework
positions, the Group’s order book at 30 September 2021 has
strengthened to £749m (2020: £692m).
During the year, the Trustees of the Lovell Pension Scheme, in
consultation with the Board of Renew, entered into a “buy-in”
agreement with Rothesay Life plc. This transaction has
significantly de-risked the Group’s balance sheet, further reduced
its pension exposure risks and improves our cashflow in the
medium term. Following the success of this transaction, the Group
continues to investigate the opportunity of fully buying-in its
liabilities with the Amco Scheme to further reduce the Group’s
pension exposure in line with our strategy.
Dividend
The Group’s strong trading performance, cash position and
positive outlook gives the Board the confidence to propose a final
dividend of 11.17p per share, an increase of 34 per cent over the
prior year final dividend of 8.33p. This will be paid on 4 March
2022 to shareholders on the register as at 28 January 2022,
with an ex-dividend date of 27 January 2022. This will represent
a full year dividend of 16p (2020: 8.33p) per share.
Engineering Services
Our Engineering Services activities account for over 95 per cent
of the Group’s adjusted operating profit and delivered revenue of
£706.7m (2020: £577.2m) with an adjusted operating profit of
£51.5m (2020: £40.8m) resulting in an operating margin of 7.3%
(2020: 7.1%). At 30 September 2021, the Engineering Services
order book was £679m (2020: £603m). The Group’s strong
organic growth performance was driven by continued positive
momentum in our Rail business, along with framework wins and
operational progress across our diverse Engineering Services
business.
Rail
Network Rail, a significant strategic customer for the Group, is
investing £53bn4 over the current Control Period (CP6), which runs
to 2024. This increased focus on operational support, renewal and
maintenance plays to our strengths as does the Government’s
commitment to its rail decarbonisation programme. This includes
a significant investment in electrification programmes, as part of
the overall UK target to deliver net-zero by 2050. With a view to
supporting the Government’s rail decarbonisation programme,
the Group acquired Rail Electrification Limited (“REL”) during the
period, a leading provider of high-quality services and Road Rail
Vehicles associated with the installation and commissioning of
overhead line electrification. This acquisition further strengthens
and expands the Group’s existing multidisciplinary maintenance
and renewals engineering services.
During the period, we continued to add new positions including
the Southern Buildings and Civils Framework and the Structures
Integrity Framework in the South, while also securing further
fencing and vegetation management work under CP6.
16
Renew Holdings plc Annual Report and Accounts 2021
As the largest provider of multidisciplinary maintenance and
renewals engineering services to Network Rail, we support the
day-to-day operation of the rail network nationally, directly
delivering essential asset maintenance through our long-term CP6
frameworks. The Group assists Network Rail through our mission-
critical renewals and maintenance services supporting assets
including bridges, earthworks, embankments, tunnels, drainage
systems, signalling, electrification and rail plant. The Group now
holds in excess of 50 CP6 maintenance and renewals frameworks
across all disciplines, covering the entire UK rail network.
We continue to develop industry-leading innovations in order to
deliver value-add services within our Rail business. These include
bespoke solutions built around the needs of our clients, including
“one of a kind” equipment deployed across geotechnical,
earthworks and vegetation management.
Overall, we saw planned work for our rail customers continue with
minimal disruption despite significant periods of time where we
operated under Government imposed restrictions. The compelling
maintenance-focused structural growth drivers within this sector
and Renew’s high-quality engineering expertise leave the Group
ideally positioned to deliver long-term, profitable growth in Rail
particularly as we see opportunities present themselves under
the next Control Period 7 (“CP7”).
Infrastructure
Highways
The Group successfully entered the Highways market during
January 2020 through its acquisition of Carnell, a leading provider
of specialist engineering services on the strategic road network.
We made good operational and strategic progress within the
Highways segment during the period, delivering essential asset
maintenance and critical infrastructure renewals underpinned
by non-discretionary regulatory requirements.
With the UK Government committing to an investment of £24bn5
in the strategic road network over a five year period, as part of its
second Road Investment Strategy (“RIS2”), £11.9bn of this funding
will be ringfenced for operations, maintenance and renewals. This
represents a significant market opportunity for Renew. Carnell
continues to leverage its innovative technological solutions to
support the needs of major clients such as National Highways.
During the period, Carnell was awarded five lots on National
Highways SDF framework the maximum amount of lots available
across civil engineering, road restraint systems and drainage
disciplines, worth £147m over six years, with work set to begin
in January 2022. Three of those lots will be delivered through a
collaboration between Carnell and AmcoGiffen which represents
a successful collaboration between different parts of the Group.
Post period end, Carnell were awarded two lots on the 7 year
Technical Surveys and Testing Framework.
We remain well placed to seize the attractive growth and market
share opportunities within Highways with increased spending forecast
over the next ten years and with the Group investing to take
advantage of opportunities in the electric vehicle charging market.
Wireless telecoms
The wireless telecoms sector contains many attractive growth
drivers, not least of all an estimated £30bn6 required to upgrade
the nation’s broadband networks to gigabit-capable speeds which
includes the UK Government’s £5bn7 investment in 5G. Additional
investment includes the Shared Rural Network, the Government’s
£500m8 programme to extend 4G mobile coverage to 95% of
the UK.
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Through our Clarke Telecom subsidiary, which is a leading
infrastructure services provider in the wireless telecommunications
market, we have exposure to all of these opportunities, holding
long-term relationships with the main UK network operators,
equipment vendors and managed service providers.
During the period, we continued to build on the operational and
strategic progress made previously, consolidating our position
on VM02’s 5G services frameworks, and securing new frameworks
with Cornerstone and 3UK. We also saw further growth delivered
in our work for the Government, alongside EE and BT, to remove
Huawei equipment from the UK’s 5G networks by 2027.
With faster internet connectivity becoming ever more critical in
the digital age and a key part of the Government’s levelling up
agenda, we expect to benefit from these trends thanks to our
specialist engineering expertise and mission-critical solutions.
Energy
Nuclear
Having worked for over 75 years in civil nuclear, we provide a
multidisciplinary service through our large complement of highly
skilled employees who operate to demanding nuclear standards,
including decontamination and decommissioning services,
operational support and asset care, as well as waste retrieval in
high-hazard areas such as legacy storage ponds and silos.
The Government’s total nuclear decommissioning provision is
estimated at £124bn9 over the next 120 years, with around 75% of
the total spend allocated to Sellafield, which is the largest of the
Nuclear Decommissioning Authority’s (“NDA’s”) sites and where
we remain a principal mechanical, electrical and instrumentation
(“M,E&I”) services contractor. The NDA has an annual expenditure
of £3bn10 on its nuclear decommissioning programme and Renew is
involved in activities representing 90% of the allocated expenditure.
On Sellafield, we operate across a number of frameworks
including the Decommissioning Delivery Partnership Framework
on both Lot 1 (Remediation) and Lot 3 Magnox Swarf Storage Silo,
Aligned partner - Remediation Redundant Asset programme,
Tanks and Vessels Framework and the Fabrication and Machining
Spares Framework. Our performance at Sellafield is strong
evidence of the Group’s capabilities, and we are well-positioned
for opportunities in the Major Projects Programme.
We are collaborating with the Programme and Project Partners
(“PPP”) to secure further growth opportunities at Sellafield. PPP
is a 20-year framework for the delivery of a broad range of major
projects for the site, with £7bn allocated for seven projects that
require multidisciplinary services including civil M,E&I.
Outside of Sellafield, we continue to build on our relationship with
Rolls Royce to secure further opportunities since our appointment
to the Diesel Generator Programme at Hinkley Point “C”. We also
deliver operational support and decommissioning activities at
Springfield and continue to widen our network, targeting key sites
such as Magnox and Dounreay where we have a position on the
Decommissioning Services Framework.
New nuclear is an essential component of the UK Government’s
plans to deliver a sustainable, low-carbon energy future, and we
expect continued and sustained growth in the area. We continue
to see a sustainable increase in demand for our specialist
manufacturing capabilities and remain well placed to capitalise
on trends in new nuclear and legacy decommissioning.
As part of the UK Government’s commitment to net-zero,
decarbonisation of our energy supply is a key challenge. The
anticipated increase in energy demand is expected to drive
significant long-term investment. Changes in the UK’s energy
landscape will provide opportunities for the Group’s
multidisciplinary infrastructure engineering capabilities.
Environmental
Water
In Water, we continue to benefit from the UK Government’s
spending of £51bn3 over AMP7 into 2025 and have seen further
investment through our clients’ strong operational expenditure
budgets. Our offer of scheduled maintenance and renewals tasks,
in addition to extensive 24/7 emergency reactive works, remains
one of our key strengths, providing specialised, mission-critical
services for clients around the UK.
During the period, the Group acquired J Browne, a water-focused
engineering services business based in Enfield, North London,
operating throughout the South of England for Thames Water,
Southern Water, Affinity Water and South East Water. This
acquisition further strengthens our position in a key attractive
infrastructure sector, is proceeding to plan and continues to trade
in line with management’s expectations.
For Dŵr Cymru Welsh Water (“DCWW”), we continue to operate
across the region on the Pressurised Pipelines Framework, Major
Civils Framework and Capital Delivery Alliance Civils & Pipeline
Framework. The Group is advancing with mains renovation work
for Bristol Water and recently secured a place on the P Removal
Programme for Wessex Water, while maintaining and renewing
existing assets on operational treatment and distribution facilities
for Yorkshire Water through the AMP7 Minor Civils Framework.
We were also successful in securing a position on Water and
Wastewater Network Construction and Engineering Framework
for Northumbrian Water.
Renew is well positioned to benefit from trends in the Water
market as companies increase expenditure on capital maintenance,
asset optimisation and supply resilience including dam safety and
infrastructure refurbishment schemes.
We are pleased to have commenced services for a number of
new clients including the Capital Delivery Framework for Thames
Water, Affinity Water and Southern Water, adding to a strong client
base that includes Scottish Canals and Peel Ports.
With the Group’s extensive experience and expertise in flood
defence, working with the Environment Agency and Canal & River
Trust to deliver the EA Flood and Coastal Erosion Framework, the
UK Government’s commitment to invest £5.2bn11 over six years to
improve flood defence presents a strong opportunity for the Group.
Specialist restoration
We are progressing well with works at the Palace of Westminster,
now entering the new flat roofs phase at the site through the
award of a five year Conservation Framework.
Specialist Building
Revenue was in line with the Group’s expectations at £84.4m
(2020: £43.2m) reflecting a continued focus on contract selectivity
and risk management. Operating profit was £1.6m (2020: £1.0m).
In Specialist Building, the order book was £70m (2020: £89m).
Our Specialist Building business focuses on the High Quality
Residential and Science markets in London and the Home Counties.
Our essential work continues uninterrupted on critical science
schemes for Defra and the Medical Research Council. The Group
has also recently been awarded a landmark scheme for one of the
London Palaces.
Renew Holdings plc Annual Report and Accounts 2021
17
Chief Executive’s review continued
The road to net zero
Our purpose is to provide essential engineering services to
maintain and renew critical infrastructure networks. It is well
recognised that investment into low-carbon infrastructure will be
fundamental in delivering the Government’s Green Industrial
Revolution and getting to net-zero emissions in the UK by 2050.
It is the Board’s ambition that the Group will achieve net zero
by no later than 2040.
From the rail network and digitally assisted roads to high-speed
telecoms and clean energy, Renew has a key enabling role to
play on the frontline of efforts to decarbonise the economy. Our
long-term approach to sustainability, which has always been at
the heart of our business, is more relevant now than ever before.
In recognition of this, at the Group’s interim results in May 2021,
we introduced quantitative targets to embed our own ESG
strategy within our wider business operations and to continuously
monitor the progress we are making across five key areas:
• customer value;
• climate action;
• operating responsibly;
• engaging our people; and
• supporting our local communities.
These objectives are designed to complement and enhance the
Group’s overall strategy of driving long-term sustainable growth
and shareholder value creation.
We continue to make good progress against each of these areas
in the year, including diverting 88% of our eligible waste away
from landfill in the year and improving on our targeted number
of mental health first aiders across our business to 1 for every
20 employees (2021 Target 1:50). More details of the initiatives
and ESG targets are included on pages 44 to 55.
2020 was the first year in which the Group reported under the
Streamlined Energy and Carbon Reporting (“SECR”) regulations
which provided us with a baseline for ongoing reporting. Renew
also continues to hold the London Stock Exchange’s Green
Economy Mark, which recognises companies that derive 50 per
cent or more of their total annual revenue from products and
services that contribute to the global “Green Economy”.
Opportunities for growth
Our high-quality compounding earnings model enables the
Group to redeploy internally generated cashflow in a disciplined
manner, creating value through highly selective and strategically
complementary M&A opportunities that supplement our profitable
organic growth. Our track record of successfully identifying,
acquiring and integrating value-enhancing acquisitions in growing
markets with ongoing renewal and maintenance requirements and
high barriers to entry, has been a key driver of Renew’s long-term
growth. The M&A landscape remains dynamic and we continue to
look at opportunities in existing and new markets that are aligned
with our acquisition criteria.
Delivering value through innovation and technology
Adding value and delivering a superior service for our customers
through technology and innovation remains one of our key goals.
We continuously seek to develop and implement innovative
working techniques to improve operational performance and
support the evolving needs of our clients across all of our sectors.
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Renew Holdings plc Annual Report and Accounts 2021
During the year in Rail, we launched the innovative Mega Vac,
a bespoke Road Rail Vehicle which allows track drainage to be
unblocked in record time and provides time and cost efficiencies
for tasks including specialist jetting operations. We also developed
and introduced the first rail mounted vegetation compactor on the
UK rail infrastructure. A number of our businesses are also trialling
sustainable hydrotreated vegetable oil (“HVO”) fuel and battery
power to significantly reduce the carbon emissions produced
by site operations. We continue to make progress with the
introduction of electric powered plant innovations and with the roll
out of more electric vehicle charging points across our site and
office locations.
Outlook – moving forward with confidence
On the back of another strong year for the Group, we are well
positioned moving forward to capitalise on the compelling growth
opportunities that exist across our end markets by leveraging
Renew’s unique low-risk, capital-light, high-quality operating model.
As the UK Government makes progress on its plans to level up
the economy and reach net-zero by 2050 through long-term,
record levels of committed investment in low-carbon
infrastructure, the structural growth drivers in our end markets
have never been more attractive.
The spending plans of our clients are underpinned by strategic
national needs and regulatory commitments. Our strong and
well-established market positions across key infrastructure sectors
with visible, long-term, non-discretionary spending cycles, from
rail to nuclear energy, give us confidence in the Group’s prospects.
We have carried forward this positive trading momentum into the
new financial year and have a strong forward order book which
underpins our confidence in achieving further progress in 2022.
As we look further ahead, we are committed to building on our
strengths to target new opportunities in attractive markets where
we have the skillset to deliver mission-critical engineering
infrastructure solutions for a sustainable future.
Paul Scott
Chief Executive
9 December 2021
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 30.
2
Infrastructure and Projects Authority, Analysis of the National Infrastructure
and Construction Pipeline 2021, August 2021.
3
Ofwat PR19 final determinations, December 2019.
4 Network Rail Delivery Plan, Control Period 6, High Level Summary, 26 March 2020.
5 HM Treasury, Autumn budget and spending review 2021, October 2021.
6 Department for Digital, Culture, Media & Sport, Delivering a gigabit-capable UK:
Gigabit Infrastructure Subsidy, 1 June 2021.
7
8
9
Department for Digital, Culture, Media & Sport, Project Gigabit, Phase One
Delivery Plan, 19 March 2021.
Gov.uk press release, Government breakthrough on £500 million support
package to boost rural mobile coverage, 11 March 2021.
Nuclear Decommissioning Authority, Nuclear Provision: the cost of cleaning
up Britain’s historic nuclear sites, 4 July 2019.
10 Nuclear Decommissioning Authority, Draft Business Plan, 1 April 2021 to
31 March 2024, 7 December 2020.
11 HM Government, Flood and coastal erosion risk management, Policy Statement,
July 2020.
12 Ofgem RIIO-ED1 Price Control Financial Model for the annual iteration process,
November 2020. Ofgem RIIO-ET1 Financial Model following the annual iteration
process 2019.
Section 172(1) statement
Read more about our business model on pages 20 & 21
and how the Group identifies and engages with its key
stakeholders on pages 22–25
Find out more about our culture on pages 42 & 43
More details of the Group’s sustainability commitments and
our progress against these during the year can be found on
pages 44–55
Details of how the Group manages risk can be found
on pages 56–59
Renew Holdings plc (the “Company” or “Group”)
Section 172(1) statement
As required by Section 172 of the Companies Act 2006, the
Directors confirm that, during the year, they continued to act in
such a way as to promote the success of the Company for the
benefit of all its stakeholders and confirm their commitment
to ensuring due consideration of, amongst other matters:
• the likely consequences of any decision in the long term;
• the interests of the Group’s employees;
• the need to foster the Group’s business relationships with
suppliers, customers and others;
• the impact of the Group’s operations on the community
and the environment;
• the desirability of the Group maintaining a reputation for
high standards of business conduct; and
• the need to act fairly between members of the Group.
Stakeholder engagement
Our business model on pages 20 and 21 identifies the Group’s
key stakeholders. More details on our stakeholder engagement
activities can be found on pages 22 to 25 of this report.
Information on the Group’s sustainability commitments can be
found on pages 44 to 55 of this report. The Group considers its
broader sustainability commitments as part of its decision-making
process, which includes an assessment of the impact of the
decisions it takes on the environment.
While there are circumstances where the Board engages directly
with certain stakeholder groups or on certain issues, the structure
of the Group means that it is usually best for stakeholder
engagement to take place at a subsidiary level. More information
on the stakeholder engagement that takes place, which informs
the Company’s decision-making process, can be found in the
Strategic report on pages 1 to 59 of this report.
During the year the Board has engaged across our stakeholder
groups including attendance at employee and management
conferences, and participation in our Safety and Environmental
Management Group events, capital markets days and supplier
and community events.
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Impact on decision making
The day-to-day management of our subsidiary businesses is
undertaken by the senior teams within the businesses. Renew
oversees its subsidiary businesses in the areas of finance, health
and safety, human resources, commercial and risk management.
More details of how the Group manages risk can be found on
pages 56 to 59. Members of Renew’s executive management
team attend each subsidiary’s monthly management meetings
as well as reviewing the Group’s overall financial and operational
performance at monthly Board meetings.
The Renew Board is responsible for shareholder relations, business
strategy, governance and reviewing progress against strategic
objectives for both the Group and its subsidiary businesses, as
well as considering the impact of the Company’s activities on
the environment. More information on the Group’s sustainability
commitments can be found on pages 44 to 55 of this report.
The Board receives information on these areas prior to its monthly
Board meetings and as required throughout the year.
In making its decisions, Renew considers all its stakeholders.
Whilst not all the decisions made are able to benefit all the Group’s
stakeholders at any one time, the Board is confident it reaches its
decisions in a fair and consistent manner.
One example during the year was the consideration of feedback
from our shareholders suggesting a more open approach to
our analyst results presentations. In response we delivered the
meetings virtually and were able to accommodate access from
a wider range of shareholders. We aim to continue to improve our
approach to stakeholder engagement through 2022. In making
this decision the Board carefully considered the direct impact this
would have on its shareholders.
Renew Holdings plc Annual Report and Accounts 2021
19
Our business model
Delivering
stakeholder value
Our subsidiaries, directly employed workforce and supply chain work together to
deliver a safe and responsive service supporting the day-to-day demands of the
UK’s critical infrastructure networks.
Our inputs
Our core values
Market position
The reliable nature of the UK infrastructure markets
in which we are deeply embedded gives the Board
confidence in our strategy. We have strong positions in
our markets where we operate often under long-term
framework agreements.
Engaged and committed workforce
The Group is committed to the development of
its workforce and direct engagement supports
the responsive nature of the work we undertake.
Our directly employed workforce are highly
trained and experienced in the individual markets
in which they work.
Financial visibility and strength
The markets in which we operate are largely governed
by regulation and, as such, benefit from long-term
programmes of committed funding.
National infrastructure
Operating on the UK’s critical networks, including the
rail, telecoms, water, highways and energy networks,
we support the day-to-day operation of these key
infrastructure assets.
20
Renew Holdings plc Annual Report and Accounts 2021
Compliant
The safety, health and welfare of our employees and those
potentially affected by our activities is a fundamental driver
of our highest priority of compliant service delivery.
Reliable
Demonstrable and reliable delivery performance aligned
with our clearly defined strategic priorities.
Considerate
We aim to be considerate, inclusive and respectful in the
way we employ and develop our workforce giving full
recognition to our socio-economic responsibilities.
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.
Responsible
Our responsible business strategy is underpinned by our
core values and supported by our corporate governance
framework which facilitates our growth ambition.
Responsive
A customer focused “can do” attitude that recognises
the priorities of our clients and all our stakeholders.
Progressive
Encouraging entrepreneurial spirit to drive continuous
improvement in all that we do with the objective of adding
value to all stakeholders.
Integrity
To behave honestly, openly and fairly with the highest levels
of integrity and professionalism at all times.
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Working
together
Measuring ESG
At the end of 2020 we introduced our ESG
targets. Our subsidiary businesses have been
working on delivering against these over the last
twelve months. The targets help us assess our
progress and we will continue to work on these
as we move through 2022.
Read more about our stakeholder engagement
on pages 22–25
Delivering value
Shareholders
Through our strong governance framework and system of internal
controls, the Group is effectively managed, producing consistently
strong results. We are well positioned in our chosen markets with
a differentiated business model for continued success.
Employees
We provide a range of training, development and progression
opportunities for our employees as well as attractive
remuneration packages.
Number of meetings held
with existing and prospective
shareholders during the year
46
Highly skilled workforce
3,696
Operating companies
We support our subsidiary businesses to retain their own strong
identities as well as providing central health and safety, IT, HR and
commercial support.
Number of principal subsidiaries
10
Customers
Our range of complementary skills and responsive service assists
us in providing our customers with their day-to-day requirements
and supports them in achieving their longer-term goals.
Suppliers
Operating with fairness and integrity, we work with our supply chain
to develop a working relationship which benefits all parties.
Frameworks in regulated markets
200+
Our core values
8
Communities
We support the local communities in which we operate by engaging
with them on charitable, environmental and social causes. We operate
responsibly and ensure a lasting positive impact from the work
we undertake.
Number of charities we support
50+
Renew Holdings plc Annual Report and Accounts 2021
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Our stakeholders
Stakeholder
engagement
Effective relationships with our employees, customers, suppliers, shareholders,
communities and operating companies along with wider stakeholders are
critical to the continued success of our business.
Working
together
Building
shareholder value
We build shareholder value through the
effective delivery of our long-term strategy.
Through our strong governance framework
and system of internal controls, the Group is
effectively managed, producing consistently
strong results.
We are well positioned in our chosen markets
with a differentiated business model for
continued success. We understand the strength
of our business is in our directly employed
workforce and we provide a range of training,
development and progression opportunities.
Our skilled workforce is able to deliver essential
engineering services across critical networks
including rail, telecoms, water, highways and
energy supporting the day-to-day operation
of key infrastructure assets.
Read more about our business model
on page 20
How we communicate with our stakeholders
Communication with our stakeholders is critical to the success of our
business. We seek to understand the individual stakeholder group’s
requirements and ensure communication remains appropriate.
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Employees
Who engaged
Non-executive Directors
Executive Directors
Renew senior management team
Subsidiary senior management teams
How we engaged
The Group’s Executive and Non-executive Directors engaged
our employees through site visits and presentations from the
Group’s subsidiary business teams during the year.
The Executive Directors engage with our employees
informally on a daily basis as well as at more formal events
such as annual employee roadshows, management meetings
and various forums on health and safety, HR and finance.
Outcomes
Important areas of employee engagement include training,
development and progression, health and wellbeing, Group
progress and opportunities. Supporting our employees over
the last year has enabled us to retain our experienced workforce.
The Board has been able to develop its understanding of our
employee’s environments and challenges, which in turn
influences its decision-making process.
Link to strategy
Read more on pages 26 & 27
Renew Holdings plc Annual Report and Accounts 2021
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Shareholders
Who engaged
Non-executive Directors
Executive Directors
Renew senior management team
How we engaged
We delivered a series of results meetings with our
shareholders during the year and held the Group’s Annual
General Meeting (“AGM”) in January.
The Group’s shareholders are interested in all aspects of the
Group’s operation and performance including financial and
corporate governance activities and the delivery of our
environmental, social and governance ambitions.
Outcomes
The views of the Group’s shareholders influence the decisions
taken by the Board and the executive management team. We
seek to maintain strong relationships with our shareholders
through effective communication ensuring shareholder’s
views are considered and concerns are addressed in a timely
and transparent manner.
In 2020 we listened to shareholder’s requests to be able
to join the management’s results briefings to analysts. We
considered this when developing our reporting roadshow
and ensured we were able to hosts the meetings virtually
to facilitate this.
During the year, the feedback we received from our investor
roadshow on the Group’s ESG reporting resulted in the
development of ESG targets to better measure performance.
Link to strategy
Read more on pages 26 & 27
Our stakeholders continued
How we deliver
stakeholder value
Operating companies
Customers
Who engaged
Non-executive Directors
Executive Directors
Renew senior management team
Subsidiary senior management teams
Employees
Who engaged
Executive Directors
Subsidiary senior management teams
Site management teams
Employees
How we engaged
During the year the Board attended site visits and
presentations by the subsidiary senior management teams.
Each monthly subsidiary management meeting is attended
by a member of the Renew executive team. The Group also
holds quarterly Executive Management Committee meetings,
which are a forum for Managing Directors from around the
Group to share information and best practice.
Outcomes
Strong engagement with our subsidiary companies ensures
a thorough understanding of the performance of the
businesses and ensures their alignment and progress
against the Group’s strategic objectives.
Good relationships assist with the implementation of the
Group’s minimum requirements, a set of standards which
oversees all aspects of our subsidiary’s operations.
How we engaged
Our teams engage in client meetings, workshops and site
visits. Through the work delivery process, communication is
critical and site teams and subsidiary management actively
engage with the customer, often over long-term programmes
of work.
Engaging in our customer’s initiatives, understanding their
priorities and working responsively help us build relationships
over many years with our key clients.
Outcomes
Strong and open communication helps foster long-term
relationships and build trust with our customers.
Through regular engagement we are able to develop
our understanding and deliver a responsive service
aligned to our customer’s requirements.
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
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Working
together
Communicating across
our business
The Group has a number of forums which assist
our subsidiaries in developing opportunities and
which provide a platform for sharing best practice.
Bringing employees from the same disciplines
together from across the Group helps develop
strong relationships and allows the teams to
develop collaborative opportunities.
Read more about our values
on page 20
Suppliers
Who engaged
Subsidiary senior management teams
Site management teams
Employees
Communities
Who engaged
Subsidiary senior management teams
Site management teams
Employees
How we engaged
Our supply chain engagement centres around integration,
creating a solid foundation that brings together design,
construction, delivery and processes through partner
relationships that create a culture of trust and the incentive
to innovate.
We work openly and collaboratively with sub-contractors,
specialist contractors and our Group partners to provide
the best value, most efficient, highest quality sustainable
solutions for our clients. We hold regular engagement
sessions with our supply chains in different regions and for
different frameworks to involve suppliers in our programme
and planning developing the right solutions for our clients.
We also support our supply chain with regulatory obligations
and standards as well as training.
Outcomes
We aim to share our collective challenges and goals, helping
to ensure that we deliver open, collaborative relationships
that drive true value for all our suppliers, stakeholders and
the wider community.
How we engaged
The nature of the work our subsidiary businesses undertake
means we are often working in and around the local
communities. Our subsidiary businesses are aware of
the impact of their operations and seek to keep local
communities informed through the use of face-to-face
meetings, newsletters and social media.
Community schemes and charitable events give our
businesses an opportunity to leave a lasting positive impact
from the work they do.
Engaging with local education providers supports them
in developing the skills of tomorrow.
Outcomes
Engaging with our local communities ensures we are aware
of local concerns and challenges. It allows our teams to work
with the communities in ways that benefit everyone.
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
Renew Holdings plc Annual Report and Accounts 2021
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Our strategy
Our strategy
in action
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
Progress in 2021
We made further progress
in the year supporting our
customers with the day-to-day
requirements of keeping their
essential networks operational.
Organic growth with existing
customers during the period
of 19%.
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 2021
We continued to focus on asset support,
maintenance and renewals in our markets
where spending in these areas is backed
by committed programmes of investment.
The work we undertake across our range
of markets focuses on the delivery of
essential services to keep these critical
networks operational.
Progress in 2021
During the year we expanded our services
in the water market with the acquisition of
J Browne, a direct delivery, engineering
services provider in the water sector.
The acquisition expands our geographical
coverage in water and adds new clients
to the Group including Thames Water
and Affinity Water.
During the year we were appointed to
frameworks including the Scheme Delivery
Framework for National Highways and on
drainage and devegetation frameworks for
Network Rail.
During the year we also acquired Rail
Electrification Limited which expanded
our range of services in the rail market
to include electrification.
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
We continue to focus on the organic
expansion of our engineering services
capabilities and geographical coverage
as well as seeking complementary
engineering services acquisitions.
Link to KPIs
Read more on pages 28 & 29
Link to KPIs
Read more on pages 28 & 29
Link to KPIs
Read more on pages 28 & 29
A
C
E
F
A
B
C
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F
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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 2021
We continued to expand our range of
capabilities to better meet the needs of
our clients. During the year we acquired
Rail Electrification Limited (“REL”) which
expanded our range of services in the
rail market to include electrification.
Understanding Network Rail’s
decarbonisation ambition allowed us
to develop our capabilities to offer
these key services.
We responded to numerous weather
related emergency events in the period.
Progress in 2021
During the year we delivered organic
growth of 19% and made two acquisitions
to support our growth strategy.
The team focuses on opportunities that
are aligned with the Group’s strategy as
well as opportunities to grow the
business organically.
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 28 & 29
Link to KPIs
Read more on pages 28 & 29
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E
A
B
D
Working
together
Supporting our
communities
Whilst working on the Network
Maintenance Contract for Bristol
Water to replace a section of main
in Bristol, the team at Lewis Civil
Engineering made contact with
the local Parish Council to see how
they could contribute to the local
community. The Council asked for
help with a storage solution for the
local youth club to enable them to
store some new outdoor equipment.
Lewis supplied a metal storage unit
and three members of the delivery
team took time out from their usual
activities to build it. The installation
of more storage has made a big
difference to the youth club which
is now able to offer its young people
more activities including football
and basketball.
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
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Key performance indicators
Performance
measurement
The Group has certain key performance indicators (“KPIs”) which are used to measure
and monitor its performance in a number of areas. The KPIs are measured on a
non-GAAP basis which reflects the most appropriate view of the underlying
performance of the business.
A.
Adjusted EPS1
50.5p
2020: 41.2p
2021
2020
2019
B.
C.
Adjusted Group operating profit1
as a percentage of revenue
Engineering Services order book1
6.5%
2020: 6.4%
£679m
2020: £602m
50.5
41.2
40.4
2021
2020
2019
6.5
6.4
6.4
2021
2020
2019
679
602
542
Description
The Group’s adjusted EPS1.
Description
Adjusted Group operating profit1
as a percentage of revenue.
Description
The Group’s Engineering Services
order book1.
Why it’s a KPI
An increase in the EPS demonstrates the
Group’s focus on the quality of earnings
and returns for our shareholders.
Why it’s a KPI
An increase in margin illustrated the
Group’s focus on quality of earnings.
2021 performance
An increase in earnings in the year
demonstrates the businesses excellent
financial performance and execution
of strategy in the year.
2021 performance
We maintained the Group’s margin
through operating profit performance
and contract selectivity.
Why it’s a KPI
This is a KPI to demonstrate the
development of our position as a leading
provider of essential engineering services
and supports workload visibility.
2021 performance
The Engineering Services order book1 has
increased following a number of strategic
framework appointments and renewals
together with the acquisition of J Browne.
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
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 30.
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New health and safety measure
for 2022
The Group’s health and safety KPI has traditionally been measured using
the Accident Frequency Rate, a measure of reportable incident absences
(seven+ days) per million hours worked. During 2021/22 we will replace
this with the LTIFR measure which considers a wider scope of incidents
and is a more detailed measure of performance.
Read more about our health and safety activities
on page 50
Our values in action
Read more about our values
on page 20
D.
Dividend
E.
F.
Health and safety
Investment in training
16.00p
2020: 8.33p
0.14
2020: 0.08
14,243
2020: 11,259
2021
2020
2019
16.00
8.33
11.50
2021
2020
2019
0.14
2021
2020
2019
0.08
0.11
14,243
11,259
16,337
Description
The Group’s full year dividend
to its shareholders.
Why it’s a KPI
The Group’s dividend shows the
Board’s confidence in the strength
of its capabilities and position within
its key markets.
2021 performance
The Board reinstated the payment of a
dividend in line with its dividend policy.
Description
Number of training days undertaken
across the Group in our various
education programmes.
Why it’s a KPI
Measuring training days undertaken
demonstrates our continued investment
in our direct delivery workforce.
2021 performance
The number of training days undertaken
in 2021 includes some impact from
Covid-19 during the first half of the year.
Description
The Accident Frequency Rate (“AFR”)
measuring reportable incidents of over
seven days’ absence per million hours
worked.
Why it’s a KPI
The safety of our employees and those
who work with us remains a priority for the
Group. This measure reflects the Group’s
commitment to improving its safety record.
2021 performance
We did not improve our health and safety
performance during the year compared
with FY20. We have taken measures to
improve and are confident of achieving
progress in this area in FY22.
Our frequency rate, measured over the
year, compares favourably to the most
recently published rates of comparable
construction businesses.
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
5
1
2
3
4
1
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Renew Holdings plc Annual Report and Accounts 2021
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Operational review
Rail
Delivering a railway
for the future
As the largest provider of multidisciplinary
maintenance and renewals engineering
services to Network Rail, we support
the day-to-day operation of the rail
network nationally.
Working
together
Rail Electrification
Limited
With a view to supporting on the
Government’s rail decarbonisation
programme, the Group acquired Rail
Electrification Limited (“REL”) during
the period, a leading provider of
high-quality services and road rail
vehicles associated with the installation
and commissioning of overhead
line electrification.
The acquisition further strengthens
and expands the Group’s existing
multidisciplinary maintenance and
renewals engineering services and
positions us well for the Government’s
decarbonisation agenda.
30
Renew Holdings plc Annual Report and Accounts 2021
Working
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24/7 emergency
rail support
Urgent response teams were mobilised on
two emergency rail earthworks schemes in
Gloucester during the period, following a period
of severe weather where flooding and landslip
damage meant the lines had to be closed.
Teams worked 24/7 to clear the landslip, re-lay
track beds and install new track and drainage
culverts to enable the lines to be opened for
passengers again. Once the lines re-opened,
work began on the surrounding embankments
to safeguard the lines against future incidents
as much as possible.
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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
• Multidisciplinary in-house design capability
• Electrification
Progress
During the period, we continued to add new positions including
the Southern Buildings and Civils Framework and the Structures
Integrity Framework in the South, while also securing further
fencing and devegetation work under CP6.
As the largest provider of multidisciplinary maintenance and
renewals engineering services to Network Rail, we support the
day-to-day operation of the rail network nationally, directly
delivering essential asset maintenance through our long-term CP6
frameworks. The Group assists Network Rail through our mission-
critical renewals and maintenance services supporting assets
including bridges, earthworks, embankments, tunnels, drainage
systems, signalling, electrification and rail plant. The Group now
holds in excess of 50 CP6 maintenance and renewals frameworks
across all disciplines, covering the entire UK rail network.
We continue to develop industry-leading innovations in order to
deliver value-add services within our Rail business. These include
bespoke solutions built around the needs of our clients, including
“one of a kind” equipment deployed across geotechnical,
earthworks and vegetation management. Overall, we saw planned
work for our rail customers continue with minimal disruption
despite significant periods of time where we operated under
Government imposed restrictions.
Our markets
Network Rail, a significant strategic customer for the Group, is
investing £53bn4 over the current Control Period 6 (“CP6”), which
runs to 2024. This increased focus on operational support, renewal
and maintenance plays to our strengths as does the Government’s
commitment to its rail decarbonisation programme, including
a significant investment in electrification programmes, as part
of the overall UK target to deliver net-zero by 2050.
With a view to supporting the Government’s rail decarbonisation
programme, the Group acquired Rail Electrification Limited (“REL”)
during the period, a leading provider of high-quality services and Road
Rail Vehicles associated with the installation and commissioning of
overhead line electrification. This acquisition further strengthens
and expands the Group’s existing multidisciplinary maintenance
and renewals engineering services.
Opportunities will arise from the integration of large capital
schemes such as HS2 with the existing rail infrastructure.
Investment in Control Period 6
£53bn4
See page 18 for references.
Future focus
The compelling maintenance-focused structural growth
drivers within this sector and Renew’s high-quality
engineering expertise leave the Group ideally positioned
to deliver long-term, profitable growth in Rail, particularly
as we see opportunities present themselves under the
next Control Period 7 (“CP7”).
Renew Holdings plc Annual Report and Accounts 2021
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Operational review continued
Infrastructure
Delivering national
improvements
During the period, Carnell was awarded
five lots on National Highways SDF
framework the maximum amount of lots
available across civil engineering, road
restraint systems and drainage disciplines.
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Wireless telecoms
Highways
Capabilities
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Acquisition, planning and design services
• Provision of 3G, 4G, 5G and Wi-Fi technologies
• Temporary sites and special events
• Maintenance and decommissioning services
Progress
We have long-term relationships with the main UK network
operators, equipment vendors and managed service providers.
During the period, we continued to build on the operational and
strategic progress made previously, consolidating our position on
VM02’s 5G services frameworks, and securing new frameworks
with Cornerstone and 3UK.
We also saw further growth delivered in our work for the
Government, alongside EE and BT, to remove Huawei equipment
from the UK’s 5G networks by 2027.
Our markets
The wireless telecoms sector contains many attractive growth drivers,
not least of all an estimated £30bn6 required to upgrade the nation’s
broadband networks to gigabit-capable speeds which includes the UK
Government’s £5bn7 investment in 5G. Additional investment includes
the Shared Rural Network, the Government’s £500m8 programme to
extend 4G mobile coverage to 95% of the UK.
We continue to see opportunities arising from the legislation
changes which have necessitated the replacement of all Huawei
equipment from UK wireless telecoms networks by 2027.
Investment in gigabit capable broadband
£30bn6
Government 5G investment
£5bn7
Capabilities
• General civils including structures, groundworks, drainage,
fencing and geotechnical schemes
Installation and maintenance of roadside communication assets
•
• Repair, refurbish and install highway drainage networks
• Unique STONEmaster filter drain refurbishment process
• Drainage surveys including pipe-jetting and record digitisation
• Full turnkey road lighting service
• SAFETYcam fleet of mobile road worker protection vehicles
• Road restraint systems
Progress
The Group continued to make good operational and strategic
progress within the Highways segment during the period,
delivering essential asset maintenance and critical infrastructure
renewals underpinned by non-discretionary regulatory requirements.
Having acquired Carnell, a leading provider of specialist engineering
services on the strategic road network, in January 2020, the
business continues to leverage its innovative technological solutions
to support the needs of major clients such as National Highways.
During the period, Carnell was awarded five lots on National
Highways SDF framework the maximum amount of lots available
across civil engineering, road restraint systems and drainage
disciplines, worth £147m over six years, with work set to begin
in January 2022. Three of those lots will be delivered through a
collaboration between Carnell and AmcoGiffen which represents
a successful collaboration between different parts of the Group.
Post period end, Carnell were awarded two lots on the 7 year
Technical Surveys and Testing Framework.
Our markets
With the UK Government committing to an investment of £24bn5
in the strategic road network over a five-year period, as part of its
second Road Investment Strategy (“RIS2”), £11.9bn of this funding
will be ringfenced for operations, maintenance and renewals. This
represents a significant market opportunity for Renew. Transition
to the new Scheme Delivery Framework will see increased
spending in renewals forecast over the next ten years. This spend
will particularly focus on structures, concrete pavement and road
restraint systems.
Road Investment Strategy 2 (“RIS2”)
£24bn5
See page 18 for references.
Future focus
With faster internet connectivity becoming ever more
critical in the digital age and a key part of the Government’s
levelling up agenda, we expect to benefit from these trends
thanks to our specialist engineering expertise and
mission-critical solutions.
Future focus
We remain well placed to seize the attractive growth and
market share opportunities within Highways with increased
spending forecast over the next ten years and with the
Group investing to take advantage of opportunities in
the electric vehicle charging market.
Renew Holdings plc Annual Report and Accounts 2021
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Operational review continued
Energy
Supporting essential
nuclear operations
The Government’s total nuclear
decommissioning provision is estimated
at £124 billion over the next 120 years,
with around 75% of the total spend
allocated to Sellafield.
Generation and networks
Capabilities
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
Progress
Our essential engineering maintenance services continued
at a number of the UK’s thermal power stations. We remain
operational on the Minor Works Framework with National
Grid and our Minor Civils Framework with Western Power
Distribution, as well as securing an extension to the SSE
Hydro Tunnels Framework in the period.
Our markets
Around 40GW of new power generation will be needed
by 2030 requiring new network infrastructure. Ofgem have
committed £37bn of funding to enhance the electricity
network and around £500m will be spent supporting the
rollout of super-fast electric vehicle charging networks.
Estimated investment in electricity
network during RII0-1
£37bn12
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On Sellafield, we operate across a number of frameworks
including the Decommissioning Delivery Partnership Framework
on both Lot 1 (Remediation) and Lot 3 Magnox Swarf Storage Silo,
Aligned partner - Remediation Redundant Asset programme,
Tanks and Vessels Framework and the Fabrication and Machining
Spares Framework. Our performance at Sellafield is strong
evidence of the Group’s capabilities, and we are well-positioned
for opportunities in the Major Projects Programme.
We are collaborating with the Programme and Project partners
(“PPP”) to secure further growth opportunities at Sellafield. PPP
is a 20-year framework for the delivery of a broad range of major
projects for the site, with £7bn allocated for seven projects.
Outside of Sellafield, we continue to build on our relationship with
Rolls Royce to secure further opportunities since our appointment
to the Diesel Generator Programme at Hinkley Point “C”. We also
deliver operational support and decommissioning activities at
Springfield and continue to widen our network, targeting key sites
such as Magnox and Dounreay where we have a position on the
Decommissioning Services Framework.
Our markets
The Government’s total nuclear decommissioning provision is
estimated at £124bn9 over the next 120 years, with around 75% of
the total spend allocated to Sellafield, which is the largest of the
Nuclear Decommissioning Authority’s (“NDA’s”) sites and where
we remain a principal mechanical, electrical and instrumentation
(“ME&I”) services contractor. The NDA has an annual expenditure
of £3bn10 on its nuclear decommissioning programme, and Renew is
involved in activities representing 90% of the allocated expenditure.
New nuclear is an essential component of the UK Government’s
plans to deliver a sustainable, low-carbon energy future, and we
expect continued and sustained growth in the area. Renew also
boasts specialist manufacturing capabilities as manufacturing
is at an all-time high, and we are well-placed to capitalise on
key sector trends.
As part of the UK Government’s commitment to net-zero,
decarbonisation of our energy supply is a key challenge.
The expected increase in energy demand is expected to
drive significant long-term investment. Changes in the UK’s
energy landscape will provide opportunities for the Group’s
multidisciplinary infrastructure engineering capabilities.
NDA nuclear decommissioning
programme annual expenditure
£3bn10
See page 18 for references.
Future focus
We continue to broaden our offering in the nuclear market
which has high barriers to entry. We are well placed to
benefit from all aspects of nuclear expenditure in the UK.
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.
Renew Holdings plc Annual Report and Accounts 2021
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Nuclear
Capabilities
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
• Nuclear decommissioning and decontamination
•
In-house specialist fabrication and manufacturing
Progress
Having worked for over 75 years in civil nuclear, we provide a
multidisciplinary service through our large complement of highly
skilled employees who operate to demanding nuclear standards,
including decontamination and decommissioning services,
operational support and asset care, as well as waste retrieval
in high-hazard areas such as legacy storage ponds and silos.
Operational review continued
Environmental
Critical water
infrastructure support
Water
Capabilities
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
• 24/7 emergency reactive works including flood risk
management programmes
• Maintenance of strategic water mains and mains drainage
• Clean and wastewater rehabilitation infrastructure
• Dam safety and pressurised pipeline specialisms
• Port, harbour and sea defences
Progress
For Dŵr Cymru Welsh Water (“DCWW”), we continue to operate
across the region on the Pressurised Pipelines Framework, Major
Civils Framework and Capital Delivery Alliance Civils & Pipeline
Framework. The Group is advancing with mains renovation work
for Bristol Water and recently secured a place on the P Removal
Programme for Wessex Water, while maintaining and renewing
existing assets on operational treatment and distribution
facilities for Yorkshire Water through the AMP7 Minor Civils
Framework. We were also successful in securing a position on
Water and Wastewater Network Construction and Engineering
Framework for Northumbrian Water.
We are pleased to have commenced services for a number
of new clients including the Capital Delivery Framework for
Thames Water, Affinity Water and Southern Water, adding to a
strong client base that includes Scottish Canals and Peel Ports.
With the Group’s extensive experience and expertise in flood
defence, we continue to work with the Environment Agency
and Canal & River Trust to deliver the EA Flood and Coastal
Erosion Framework.
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Renew Holdings plc Annual Report and Accounts 2021
Our markets
In Water, we continue to benefit from the UK Government’s spending
of £51bn3 over AMP7 into 2025 and have seen further investment
through our clients’ strong operational expenditure budgets.
Our offer of scheduled maintenance and renewals tasks, in addition
to extensive 24/7 emergency reactive works, remains one of our key
strengths, providing specialised, mission-critical services for clients
around the UK.
The UK Government’s commitment to invest £5.2bn11 over six years to
improve flood defence presents a strong opportunity for the Group.
Asset Management Programme 7 spend (“AMP7”)
£51bn3
UK Government’s six-year flood defence investment
£5.2bn11
See page 18 for references.
Future focus
Renew is well positioned to benefit from trends in the Water
market as companies increase expenditure on capital
maintenance and asset optimisation, supply resilience including
dam safety and infrastructure refurbishment schemes.
Our offer of scheduled
maintenance and renewals
tasks in addition to extensive
24/7 emergency reactive
works remains one of our
key strengths.
Working
together
Strengthening our offering
in water
During the period, the Group acquired J Browne, a water-
focused engineering services business based in Enfield,
North London, operating throughout the South of England
for Thames Water, Southern Water, Affinity Water and South
East Water. This acquisition further strengthens our position
in a key attractive infrastructure sector and is proceeding
to plan and continues to trade in line with
management’s expectations.
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Specialist restoration and
land remediation
Capabilities
• Soil and groundwater remediation
• Design of bespoke remediation and ground
engineering solutions
• Specialist restoration and conservation
Progress
We are progressing well with works at the Palace of Westminster,
now entering the new flat roofs phase at the site through the
award of a five year Conservation Framework.
In land remediation we continued to maximise the
potential of the position we have developed in the
UK remediation market.
We are seeing growing demand for our specialist
capabilities on landmark schemes.
Renew Holdings plc Annual Report and Accounts 2021
37
Operational review continued
Specialist Building
Delivering specialist
science and HQR
schemes
High Quality Residential
and Science
Capabilities
• High Quality Residential refurbishment schemes in London
and the Home Counties
• Development of research and laboratory schemes
• Extensive temporary structural engineering provision
•
In-house design and engineering capabilities
Progress
Our Specialist Building business focuses on the High
Quality Residential and Science markets in London and
the Home Counties.
Our essential work continues uninterrupted on critical science
schemes for Defra and the Medical Research Council. The
Group has also recently been awarded a landmark scheme
for one of the London Palaces.
Future focus
We focus on delivering technically challenging Science and
High Quality Residential projects in London and the Home
Counties where our expertise and experience prove
differentiators in this market.
The Group continues to be selective in these markets where
we have a long-established track record.
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Financial review
Strengthening
our position
Dear Shareholder
Results
Group revenue1 from continuing activities was £791.0m
(2020: £620.4m), with an operating profit1 from continuing
activities prior to amortisation and exceptional items of £51.2m
(2020: £39.6m). A tax charge of £11.1m (2020: £6.9m) resulted in a
profit after tax prior to amortisation and exceptional items for the
year of £39.7m (2020: £31.9m), an increase of 24 per cent. After
deducting £10.1m (2020: £6.7m) of amortisation and exceptional
costs, the profit for the year from continuing activities was
£32.1m (2020: £26.3m).
Amortisation and exceptional items
The £10.1m 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 Giffen Holdings Limited, QTS Group Limited
and Carnell Group Holdings Limited, Rail Electrification Limited (“REL”)
and J Browne Group Holdings Limited (“J Browne”). Following this
amortisation there remains £29.2m of other intangible assets on the
balance sheet. We have recognised an exceptional charge in the year
of £0.8m in relation to deal expenses relating to the acquisition of REL
and J Browne. In addition, we have recognised a £1.7m actuarial estimate
of additional liabilities relating to the extension of the Barber window
in the Amco Scheme where our latest legal advice is that the scheme
may not have normalised pension age, as previously assumed, in
the early 1990’s. Finally, we have provided for an additional £1.1m
as a result of the latest High Court ruling on GMP equalisation in both
the Lovell and Amco defined benefit pensions schemes.
Net cash
The Group’s balance sheet shows a net overdrawn cash balance
of £9.4m (2020: positive £13.4m) and bank borrowings of £4.4m
(2020: £13.1m) at the year end. Consequently, the Group’s net
debt1 position as at 30 September 2021 was £13.7m (2020: net
cash £0.3m).
Sean Wyndham-Quin CA
Chief Financial Officer
Revenue
£791.0m
2020: £620.4m
Net debt
£13.7m
2020: Net cash £0.3m
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 30.
Renew Holdings plc Annual Report and Accounts 2021
39
The Board continues to work closely with the Trustees of the Amco
Scheme, to reduce the risks associated with the liabilities of the
scheme. At the year-end, 40 per cent (2020: 47 per cent) of the
scheme’s total liabilities were matched by annuities; the reduction
reflecting the impact of the increase in the scheme liabilities due
to the impact of the Barber window adjustment and the GMP
equalisation window adjustment. In the triennial valuation of
the scheme, which was carried out at 31 December 2019, the
scheme actuary measured the deficit in the scheme at £0.8m.
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 was projected to eliminate the deficit
under the Statutory Funding Objective of the Pensions Act 2004
by 31 March 2026. The next triennial valuation is for the period
ending 31 December 2022.
Discontinued operations
The Group made a loss for the year from discontinued operations
of £1.6m (2020: £5.6m) all of which relates to an additional accrual
to cover latent defect liabilities in Allenbuild Limited, a business
that was sold to Places for People Group Ltd in October 2014,
but where the Group retains a liability for a number of
historic contracts.
Earnings per share
Earnings per share1 before exceptional items and amortisation
was 50.5p (2020: 41.2p) and on a statutory basis, after the impact
of exceptional items, amortisation and loss for the year from
discontinued operations was 38.7p (2020: 26.8p). The weighted
average number of shares in issue for the period was 78.7 million.
Distributable profits
The distributable profits of Renew Holdings plc are £50.3m
(2020: £46.5m). The Board is recommending a final dividend
of 11.17p per share (2020: 8.33p) bringing the total for the year
to 16.00p (2020: 8.33p).
Sean Wyndham-Quin CA
Chief Financial Officer
9 December 2021
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 30 to these accounts.
Financial review continued
Banking facilities
The Group has a four-year term loan with HSBC UK Bank plc 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 £44.2m in the form
of a revolving credit facility with HSBC UK Bank plc and National
Westminster Bank plc which is committed until January 2024.
In addition, the Group has a further £10.0m 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.
Going concern
The Directors continue to adopt the going concern basis
in preparing the Group’s 2021 financial statements.
Leasing
At 30 September 2021, the Group had £15.6m (2020: £15.4m)
of lease liabilities. The liability associated with right of use assets
as at 30 September 2021 was £10.9m (2020: £9.9m).
Taxation
The tax charge on profit for the year is £8.7m (2020: £5.8m), a rate
of 21.3 per cent which is marginally ahead of the headline rate of
19.0 per cent primarily due to the increase in the deferred tax rate.
Corporation tax paid in the year amounted to £7.3m (2020: £8.2m).
The Group reverted to the usual four payments on account in the
year ended 30 September 2021, which normalised the payment
profile. The Group repaid c£17m of deferred VAT, that arose in
the year ended 30 September 2020 as a result of the Covid
pandemic, during the financial year.
Pension schemes
At 30 September 2021, the IAS 19 valuation of the Lovell Pension
Scheme, which was closed to new members in 2000, resulted in
an accounting surplus of £0.4m (2020: £17.8m) after accounting
for deferred taxation. The net surplus has reduced by £17.4m
during the year, due primarily to the accounting treatment of
the buy-in announced in November 2020.
On 3 December 2020 the Company announced that the Trustees
of the Lovell Scheme used scheme assets to purchase annuities
which match pension liabilities in a transaction known as a “buy-in”
where the annuity policy remains an asset of the scheme.
Following the conclusion of this buy-in, materially all of the
scheme’s liabilities are now matched with annuities and
consequently there was a reduction of the IAS19 Retirement
Benefit assets in the Group’s accounts this year. Whilst an
additional cash contribution into the scheme is likely to be
required once the GMP equalisation calculations have been
completed in 12–18 months’ time, this buy-in was a significant
event in the history of the Group as it means that the cash
contributions to be paid into the scheme are no longer required
and all of the scheme’s liabilities have essentially been matched
with corresponding annuities, removing the Group’s exposure
to investment and funding risks in that scheme.
The IAS 19 valuation of the Amco Pension Scheme shows a net
deficit of £0.1m (2020: surplus of £0.5m) after accounting for
deferred taxation. The net surplus has decreased by £0.6m
during the year, primarily due to the impact of the Barber
window adjustment and the GMP equalisation adjustment
as explained earlier in this section.
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Capital Allocation Policy
Capital allocation in priority order:
For the year ending 30 September 2022
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 sufficient headroom 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
Chief Financial Officer
9 December 2021
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Renew Holdings plc Annual Report and Accounts 2021
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Our culture
Our cultural
framework
The Group’s values, vision, strategy and purpose support our culture.
Our beliefs and behaviours are guided by these frameworks which provide
a structure to set the operational expectations across our business.
Our purpose – 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.
Our strategy – Our long-term strategy is focused 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.
Read more about
the importance of our
stakeholders and how
we engage with them
on pages 22–25
Read more about how
we work together on
pages 4–9
Our values
The following eight values are
key to the successful delivery
of our long-term strategy.
Read more about our values
on page 20
Integrity
Compliant
Progressive
Considerate
Our values
Responsive
Responsible
Sustainable
Reliable
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Working
together
EDI Champions
At Carnell, the following measures helped ensure compliance with the businesses
EDI responsibilities:
• the equal opportunities, dignity at work, and whistleblowing policies
have been reviewed;
• access to policies has been made easier;
• the business has signed up to The Chartered Institution of Highways
& Transportation’s Diversity & Inclusion Charter;
• the business has worked with National Highways to define “what EDI excellence
looks like”; and
• undertook surveys with National Highways to improve diversity in the industry.
The business has a number of EDI Champions who work to ensure Carnell develop a
class leading approach. Regular features in internal newsletters has helped to develop
awareness of EDI across the business.
Our values
At the heart of what we do is our people; their safety and
wellbeing is our priority. As a responsible employer we strive to
ensure fair treatment of all our employees and those who work
with us in the course of our business. Our sustainability agenda
includes giving back through our employment initiatives,
involvement with local communities and charitable donations.
Our cultural blueprint
Our culture is built on our core values which are integrated in all
aspects of our business. We are committed to being a responsible
business and strive to add value to all our stakeholders. The Company’s
culture is reinforced in the day-to-day operations of our business.
Our future workforce
We operate a range of training and development programmes
to support the future ambitions of our workforce and the need to
develop the skills of the future. We are a keen to support internal
talent and try to promote internally where possible.
The Group’s Leadership Development Programme recognises the
need for skills training and support a large number of apprentices
across our organisation.
Our workforce engagement
Our subsidiary businesses engage with their workforce in a range
of ways including staff briefing events, intranets and newsletters.
Strong engagement is key to reinforcing our Company’s values.
How we achieve our purpose
We operate across a range of markets, directly delivering essential
engineering services. Our subsidiary businesses are leading
providers in their markets and as such are able to develop
long-term relationships with clients responsible for some
of the country’s critical networks.
We offer multidisciplinary engineering services, undertaking
planned and reactive tasks for our clients. In addition we provide
a 24/7 emergency support response across the networks
we support.
We typically undertake a high volume of low value tasks which
are critical to keep the networks operational.
Read more about our Board
on pages 60–63
Our workframe in action
Culture
Purpose
Working
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Renew Holdings plc Annual Report and Accounts 2021
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Sustainability
Sustainability
with purpose
Our purpose-led approach to ESG is based on our five
commitments. These ensure we continue to align our business with
the environmental, social and governance (“ESG”) requirements
of our stakeholders. It is important that we work responsibly
and in a sustainable manner to leave a lasting positive impact.
Dear Shareholder,
Renew understands its responsibility to the environment and all
its stakeholders. Renew is committed to operating responsibly
and as such it is my role, together with the Board, the Group’s
SHEQ Director and management teams, to drive our approach
to sustainability.
During the year we have sought to better understand the effect
of our operations on the environment through increased
sustainability reporting. As a Group we have set the reporting
requirements of our subsidiary businesses so we have a clear
picture of our overall impact in key areas to enable us to align the
Group’s ESG strategy to those areas where we can have the most
impact. Our ESG target data will provide us with an assessment of
the progress we have made since 2019/20.
The sustainability targets we introduced help us support the
delivery of the UK’s net zero carbon target by 2050. It is the Group’s
intention to achieve net zero no later than 2040 and I look forward
to reporting more progress on these during 2022.
As part of our annual strategic planning process during the year,
particular emphasis was placed on how the Group’s targets and
delivery roadmap will be achieved by our subsidiary businesses
to ensure that as a Group we meet our overall ESG responsibilities.
A purpose-led approach
Last year we developed a range of ESG targets which help us
measure the success of our business in achieving our ambitions
in this area. We have collated data from across our subsidiaries
during 2021 which shows that there are some areas we need to
focus on improving more than others such as our use of gas oil
and our company car emissions. Our subsidiary businesses are
aligned with the Group-wide targets to ensure we are focusing
our improvement efforts on those areas that will deliver the
largest environmental gains.
Our sustainability strategy
Based around the five key areas of customer value, climate action,
operating responsibly, engaging our people and supporting our
local communities, our sustainability strategy has been developed
through engagement across our businesses. During 2021 we have
been assessing this data to inform our sustainability strategy going
forward, as well as delivering training and awareness through
workshops, online training and forums. Representatives from our
subsidiary businesses have been meeting to share innovative
working techniques and best practice.
Paul Scott
Chief Executive
9 December 2021
During the year we have sought
to better understand the effect
of our operations on the
environment through increased
sustainability reporting.
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Board ESG engagement
During 2021/22 the Board will meet twice to discuss and
oversee the delivery of the Group’s sustainability strategy and
our pathway to net zero. As part of this review the Board will
look at the management of climate related risks and
opportunities to the business.
Read more about our culture
on pages 42 & 43
Our commitment to
the UN Sustainable
Development Goals
The 17 Sustainable Development Goals (“SDGs”), launched
in 2015 with the 2030 Agenda for Sustainable Development,
provide a shared blueprint for tackling some of the planet’s
most pressing issues and will help create a better place in which
we can all live.
Whilst we support all the SDGs, the work we do to mitigate
the impact of our operations can be aligned with a number
of the SDGs in particular:
8 Decent Work and Economic Growth
Promote sustained, inclusive and sustainable
economic growth, full and productive
employment and decent work for all.
See how we contribute towards this SDG
on pages 22–25, 42 & 43 and 52 & 53
9 Industry, Innovation and Infrastructure
Build resilient infrastructure, promote inclusive and
sustainable industrialisation and foster innovation.
See how we contribute towards this SDG
on pages 26 & 27 and 30–38
12 Responsible Consumption and Production
Ensure sustainable consumption and
production patterns.
See how we contribute towards this SDG
on pages 46 & 47 and 54 & 55
13 Climate Action
Take urgent action to combat climate change
and its impacts.
See how we contribute towards this SDG
on pages 48 & 49
Climate related financial
disclosures
Our roadmap to full disclosure in 2023
The Task Force on Climate-related Financial Disclosures
(“TCFD”) recommendations provide a framework for
companies to disclose the impacts of climate change on their
financial performance and require enhanced disclosure on
governance, strategy and risk management as well as metrics
and targets.
2021/22
1. Establish governance
We recognise the critical threat climate change poses
and the need for urgent action. The Board of Renew is
responsible for overseeing the Group’s ESG response.
The Group’s SHEQ Director will lead the practical aspects
of co-ordinating the Group’s ESG programme.
Board commitments
1. Undertake two ESG reviews annually
Operational commitments
1. TCFD steering committee established
2. Enhanced ESG reporting by subsidiary businesses
2. Scope potential risks
Undertake a number of workshops across the business
to identify climate related risks and our response.
3. Roadmap agreed
Develop a roadmap to ensure we are in a position to be
able to report in line with the TCFD recommendations
in FY23.
Renew Holdings plc Annual Report and Accounts 2021
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Sustainability continued
Our ESG
commitments
We continue to improve the sustainability of our business by delivering
on our five key ESG commitment areas. Led by the Chief Executive
Officer, operating responsibly and with transparency is at the heart
of our approach.
Our ESG framework is designed to support the delivery of long-term
sustainable value to all our stakeholders.
Our ESG commitments
We focus our approach around five key commitments
to ensure we are aligned with the ESG requirements of
all our stakeholders.
Customer value
We strive to extend the range of benefits
we can provide for our existing and
potential customers.
Climate action
Our climate action is delivered through
governance, risk management, innovative
working practices and education.
Operate responsibly
We understand our responsibility to our
stakeholders and work hard to leave a
lasting positive impact from the work we
undertake.
Engage our people
We are a direct delivery business. Strong
engagement with our workforce is critical
to our business.
Support local
communities
We support charitable causes,
community causes, local education
opportunities and much more.
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Customer value
Our progress in 2020/21 Our target
Customer survey
response rate.
41%
Retention of key
framework customers.
2021 target: 50%
100%
2021 target: 100%
Customer engagement
Carnell was shortlisted in the Customer and Delivery categories at
the 2020 National Highways Awards. The awards recognise people
internally and in the supply chain who have achieved outstanding
results in safety, customer experience and delivery on the highways
network. Carnell’s “Think Customer” programme was a finalist in
the “Employee Engagement and Behavioural Change” award.
Lewis Civil Engineering supported Wessex Water with
improvements to the local environment by reducing phosphorus
in the final effluent during AMP7 works at Winscombe Water
Recycling Centre in Somerset.
The output was achieved by the construction of chemical dosing,
mixed media filtration and increased storm storage and has been
a model of collaboration between Lewis, Wessex Water and other
key project stakeholders.
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Sustainable innovation
The diverse markets in which we operate have unique challenges
and we employ innovative working practices across our business
to bring operational and cost efficiencies to our clients.
In rail, the development of a new drilling rig was specifically
designed to locate suspended hidden shafts and has enabled safer
working practices for the team on site and increased productivity.
Elsewhere on the rail network a bespoke tunnel cleaning road
rail vehicle attachment has been further developed to deliver
increased manoeuvrability and safe disposal of collected waste
products. The machine allows the delivery of exceptional cleaning
rates and the potential to use the system for other applications
on the rail network.
As part of its bespoke plant fleet, QTS has developed the Mega
Chipper V2 which now features text fault reporting and remote
diagnostic access to assist with its devegetation operations.
During the year, on behalf of Network Rail, we carried out an
essential timber replacement programme to restore Traeth Mawr
Viaduct. The location of the viaduct and the water level working
environment meant that we had to create a new jacking system
that could be mounted ahead of the works commencing. The new
system allowed us to quickly and safely replace end of life timber
on the structure providing a safe, reliable and resilient railway for
passengers. The jacking system was installed below the structure
ahead of the planned railway line possession, saving time.
Supporting safety
Our subsidiary, Carnell, was Highly Commended at the
2021 Highways Awards in the “Best Use of Technology”
category for its High Density Array Ground Probing Radar
technology. The system improves safety for the site teams
by detecting uncharted cables and reduces the risk of
cable strikes and potential injury. This supports National
Highway’s aspiration to halve service strikes in the period
to 2025.
Our values in action
Customer first
On all major projects, J Browne uses a proactive engagement
model with both customers and stakeholders. Over the five
month duration of the A5 Uphill Phase 2 project, there was
contact with over 2,000 residential properties in the
surrounding streets and almost 300 businesses along the
Edgware Road to ensure that all residents and businesses
were aware of the upcoming works.
As the country had just exited the first Covid-19 national
lockdown, customer communication had to be adapted to
comply with social distancing guidelines. Letters were sent via
mailshot and door-to-door engagement and drop-in sessions
took place outside with face masks worn at all times, in line
with Covid-19 guidance.
Despite the size and scale of the project, the proactive
engagement with customers resulted in just six escalations
being raised by customers over the duration of the project.
Each escalation was handled by the J Browne customer
liaison team and resolved promptly. The result of this
proactive approach was recognised by both Brent Council
and Barnet Council.
Our values in action
Read more about our values
on page 20
Read more about our values
on page 20
Working
together
Renew Holdings plc Annual Report and Accounts 2021
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Sustainability continued
Climate action
Our targets
We aim to achieve net zero by
2040, starting by obtaining
100% of the energy we use from
“green” energy tariffs by 2022.
Our progress in 2020/21
33%
2022 target: 100%
By 2022 we expect all our
subsidiary businesses to offer
electric/hybrid vehicle
options across their company
car schemes.
100%
2022 target: 100%
We expect to have transitioned
the majority of our commercial
fleet to low carbon by 2030. 1%
2030 target: 80%
Reducing carbon emissions
A number of our businesses are using all-electric vehicles
including at Carnell where, as a leading delivery partner, it will
be helping National Highways build on its existing progress to
achieve its ambition of net zero carbon for maintenance and
construction by 2040.
StoneMaster, Carnell’s sustainable approach to filter drain
refurbishment, was recognised at the Green Apple Awards for
environmental best practice in 2020. Carnell is now recognised by
Green Apple as a Green World Ambassador
As part of its commitment to carbon reduction, AmcoGiffen has
recently successfully trialled an alternative combined sustainable
fuel and battery power system on site. The initiative used a
generator, powered by hydro-treated vegetable oil (“HVO”) instead
of red diesel emitting cleaner exhaust emissions, that charged a
battery storage unit during the day and switches off at night
allowing the site to run on battery. The trial reduced carbon
emissions by around 90% and the battery storage unit reduced
overall fuel consumption and generator run time by 49% as well
as reducing emissions, improving air quality and eliminating noise
pollution. AmcoGiffen is now mandating that all sites will use this
system where relevant and practical.
Our values in action
Read more about our values
on page 20
48
Renew Holdings plc Annual Report and Accounts 2021
Supporting the UK’s net zero carbon goals
The UK Government’s strategy to reduce emissions to net zero by
2050 requires action by all emission producers. We understand
the role we must play as a business in taking action to addressing
the emissions we produce and, as such, we are committed to
achieving net zero ahead of the Government’s target date and
in any case no later than 2040.
Reducing our impact
Our assessment of the emissions we produced in 2019/20
provided us with a benchmark with which to measure the progress
we are making in reducing our environmental impact. Our subsidiary
businesses have reported their climate data throughout the year.
The 2019/20 data highlighted that commercial vehicles and our
use of gas oil were responsible for the majority of the emissions
we produced. As a result of this, during the year we focused on
reducing our emissions in these areas in particular. We introduced
initiatives to trial the use of alternative, cleaner energy sources to
power our sites and the procurement of electrical commercial
vehicles across our business.
We also introduced a number of climate targets which assist us in
aligning our subsidiary businesses with the Group’s overall climate
ambitions. These targets also ensure our subsidiaries focus their
carbon reduction efforts on those areas where we can make the
largest impact.
During the year our subsidiary businesses have made a number
of climate focused pledges including at Walter Lilly which
has committed to the Declaration on Climate and Biodiversity
Emergency with the business engaging its clients, designers
and supply chain to reduce waste during its construction and
deconstruction operations.
Climate related risks and opportunities
During 2022 the Group will undertake a series of consultations
and risk assessments across its subsidiaries to identify the
climate related risks and opportunities to our business.
Our efforts to mitigate our environmental impact may also provide
the Group with opportunities including cost reductions with the
introduction of low-energy technologies, resource efficiencies
and the development of new technologies and services.
To align with the financial disclosures required by the Task
Force on Climate-related Financial Disclosures we will align the
assessment of risks and opportunities in the four key areas of
governance, strategy, risk management and metrics & targets. This
assessment will help us to understand how climate change could
affect our revenue and costs, in particular in identifying where
value might be eroded and where there may be potential for value
to be added.
The identification and
assessment of climate related
risks and opportunities will
assist in informing our strategic
planning process and
contributing to the sustainable
growth of our business.
Working
together
Streamlined Energy and Carbon Reporting (“SECR”)
We measure and report our energy and carbon data across the
entire Group, providing comprehensive data to substantiate our
overall environmental impact. Our SECR statement includes all
emission sources required under the 2019 regulations for the
financial year ended 30 September 2021.
Renew emitted 34,832.7 (2020*: 27,245.4) carbon dioxide
equivalent tonnes (“tCO2e”) of energy during the year.
The two carbon intensity ratios that we have chosen to measure
reflect our business performance. Our carbon intensity ratio was
9.42 tCO2e per average employee headcount, and 0.044 tCO2e
per £000 of revenue.
Moving forward, we will set both absolute and percentage reduction
targets for carbon emissions, so we can begin to measure energy
efficiency performance alongside business performance.
In order to calculate the carbon emissions, we have used the
emission factors from the UK Government’s GHG Conversion
Factors for Company Reporting 2021. The scope 1 and 2 emissions
reported are for all facilities across the Group under our operational
control. This includes all the Group’s subsidiaries as listed at the
back of this report. We have also voluntarily chosen to report
scope 3 emissions from grey fleet, i.e. employee vehicles driven
on Company business, and emissions from leased vehicles.
This will provide a full picture of our vehicle emissions.
Greenhouse gas emissions
Carbon emissions (tCO2e)*
Transport (scope 1)
Transport (scope 3)
Electricity (scope 2)
Purchased gas (scope 1)
Gas oil (scope 1)
Other fuels (scope 1)
Total emissions
Carbon intensity ratio 1
(tCO2e/£000)
Carbon intensity ratio 2
(tCO2e/avg. headcount)
Total UK energy usage (kWh)
2021
2020 **
14,965.3
1,983.9
802.9
241.3
13,377.5
1,004.5
961.0
400.6
Increase/
decrease
1,587.8
979.4
-158.0
-159.4
16,781.1
11,431.3
5,349.8
58.3
70.5
-12.2
34,832.7
27,245.4
7,587.4
0.044
0.044
9.42
8.28
0.0
1.1
142,800,433
110,626,528
32,173,905
*
tCO2e/year defined as tonnes of CO2 equivalent per year.
** Restated.
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Innovation in action
Our bespoke Mega Vac Road Rail Vehicle is one of the most
unique drainage machines on the UK rail network. The
multi-purpose machine allows track drainage to be unblocked
in record time and is ideal for jetting large culverts and
under-track crossings, using specialist jetting heads.
In highways, the team at Carnell has installed an innovative
Eco SmartCharge Run-Lock device on its fleet of SafetyCam
vehicles. The device enables the vehicles to be operated at
the roadside without needing the engine running, reducing
fuel usage and harmful emissions by up to 85%. As well as
the environmental benefits, it provides cost savings for
our clients.
Our values in action
Read more about our values
on page 20
Our commitment to net zero
Across the Group we are increasing the number
of electric vehicles and plant we use to support
our commitment to achieving net zero.
At J Browne, as part of its work in water, key parts
of its vehicle fleet are being replaced with electric
powered equipment including an electric powered
telehandler to help to reduce its CO2 footprint.
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
49
Sustainability continued
Operate
responsibly
Our targets
We seek continuous
improvement in the Group’s
accident frequency rate. Our
target remains zero harm each
year.
Our progress in 2020/21
0.14
2021 target: 0
We aim to divert the majority of
the eligible* waste we produce
away from landfill across our
operations.
*Non-hazardous
88%
2022 target: 95%
A health and safety
focused culture
Health and safety remains a priority across the Group and as such
is led by the Chief Executive with the support of the Renew Board,
the Group’s SHEQ Director and the Group’s SHEQ advisors, based
in our subsidiary businesses.
Ensuring the safety of all the Group’s stakeholders is also the
focus of the Group’s Safety and Environmental Management
Group (“SEMG”) forum, which met four times in the year. The
SEMG forum is attended by senior operational personnel and
senior safety practitioners from around the Group and assists with
knowledge sharing and best practice. During 2022 the SEMG
forum focused on behavioural science, plant people interface,
occupational health and waste management.
Our approach to safety is driven
by the Group’s directly employed
regional safety practitioners who
are based within our subsidiary
businesses and have industry
experience and specific
knowledge of the challenging
environments in which we work.
Paul Scott
Chief Executive Officer
50
Renew Holdings plc Annual Report and Accounts 2021
Supporting our culture
The Group continues to develop its positive learning culture
through a number of initiatives during the year. A number of
our businesses employ a behavioural analysis toolkit to help us
understand why unsafe behaviours sometimes occur and how
we can change our work environment to make it more likely
we see safe behaviours. Toolkit training and workshops are
also delivered to support this work.
Health and safety remains the priority at all Board and
management meetings. The Group’s positive learning culture
is driven by close call reporting, incident investigations and
culture reinforcement.
Safety in action
Our approach to safety is driven by the Group’s directly employed
regional safety practitioners who are based within our subsidiary
businesses and have industry experience and specific knowledge
of the challenging environments in which we work.
Working in the challenging nuclear environment, Shepley
Engineers achieved a significant safety milestone during the year
by surpassing 12 million hours of work without recording a RIDDOR
reportable incident at the Sellafield nuclear site in Cumbria.
On the rail network, QTS provided its transient site investigation
teams with portable defibrillators to use. The teams mainly operate
in remote locations where access to more usual defibrillators
would not be possible.
Accreditations and awards
Our businesses are accredited with various health and safety
schemes, including Constructionline, SafeContractor, the
Contractors Health & Safety Assessment Scheme, Achilles Verify
and the Railway Industry Supplier Qualification Scheme. Our
businesses also conform to the ISO 14001 and ISO 18001 standards.
We achieved many Royal Society for the Prevention of Accidents
(“RoSPA”) awards during the year including at Carnell which
achieved a third RoSPA President’s Award which recognises twelve
consecutive RoSPA Gold Awards. Lewis was awarded a seventh
consecutive RoSPA Gold Award during the year and VHE was
awarded an Order of Distinction for 19 consecutive Gold Awards.
Building strong partnerships
Supporting out customers
We engage with our clients across the markets in which we
operate. In rail, we supported Network Rail’s “Learning from
Events” week in June designed to enhance safety and
environmental standards on the rail network.
Supply chain engagement
We also took part in the Midlands Rail Forum event during the year,
delivering a presentation on changing supply chain culture and in
particular how we can embrace an environment where employees
feel empowered to challenge normal working practices to foster
innovative thinking, maximise value and eradicate waste.
Engaged with the environment
Biodiversity
As part of the Group’s commitment to the impact of climate
change on biodiversity, during 2022 we aim to review the
measurement and management of our biodiversity impact.
Waste management
The Group has a collaborative approach to waste management
where our subsidiary businesses work in partnership with
a specialist waste management broker which provides
environmentally friendly waste management solutions.
During 2021, we achieved a recycling rate of 88.2% by diverting
342,103 tonnes of waste from landfill. We continue to utilise
reporting tools to understand how waste is created and managed
across our Group. During 2022 this will be developed to report
how the waste recycled has had a positive impact on CO2 emissions.
Green infrastructure
We remain proud holders of the London Stock Exchange’s Green
Economy Mark which recognises those companies that derive
more than 50% of their revenues from products and services that
are contributing to the environmental objectives such as climate
change mitigation and adaptation, waste and pollution reduction,
and the circular economy.
The “QTS Challenge”
QTS site operatives are encouraged to speak out
and challenge behaviours that they feel might
risk the health and safety of themselves or their
colleagues. The “QTS Challenge” has worked well
and has encouraged our teams to be more vocal
when it comes to suggestions for increasing
health, safety and welfare.
Our values in action
Read more about our values
on page 20
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Working
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Safety through innovation
The QTS team has developed and installed an
innovative solar-powered LED lighting system
on access stairs throughout Scotland’s railway.
The first trial was done on access stairs at Cardross
Road in Dumbarton. The system is eco-friendly,
extendable to any length, remotely monitored
and controlled to enhance its power savings
and lifetime features.
The system will allow for safe access for rail operatives
and maintenance staff all year round.
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
51
Training and development
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 including day release schemes,
apprenticeships and mentoring programmes.
An example of one such programme is at AmcoGiffen with
the launch of the specially developed Controller of Site Safety
(“COSS”) Academy programme. In addition to this there will
also be workshops with site teams to understand how further
improvements can be made to the planning and safe delivery
of our rail operations.
As an Investors in Young People Gold Award company, QTS hosted
its first apprenticeship open day during the year. Young people
considering an apprenticeship were invited to attend the open
day at the QTS head office in Scotland where they met a number
of the workshop team.
QTS also sponsored the Commitment to People Development
category at the Nottinghamshire Business Awards during 2021.
Diversity and inclusion
We work hard to develop a positive working culture that allows
all employees, regardless of their gender, disabilities, sexuality,
race or religion, to build their careers within an open and
collaborative environment.
During 2022, the Group will be setting diversity targets to measure
our progress. These will form the basis of our ongoing diversity
and inclusion reporting.
As well as promoting diversity and inclusion generally across
our business, a number of our subsidiaries took part in events
for National Inclusion Week to raise awareness of the challenges
faced by business and wider industry in creating a more diverse
and inclusive working environment.
We also supported the Railway Industry Association and Women
in Rail’s Equality, Diversity & Inclusion (“EDI”) Charter in a number
of our businesses. Through the collaboration with other rail
industry professionals, contractors and businesses we hope to
play our part in identifying improvements to current standards,
championing best practice, and working together to build an
equal and fair rail sector.
We recognise that our business, along with the wider engineering
industry, has traditionally been male dominated. We continue
to work to recruit women into the industry through recruitment
drives, and by supporting and increasing the opportunities
available to women.
An example of this is at Walter Lilly which is committed to
supporting the next generation of women. Currently around
20% of its employees are women and a third of its sponsored
and day release students who graduated in the past two years
have been women.
Sustainability continued
Engaging with
our people
Our targets
As a measure of employee
engagement across our
business, we target a survey
response rate of 70%.
As part of a range of initiatives
to support our employee’s
mental health, we are increasing
the number of trained mental
health first aiders in our
business.
Investing in training is key to
recruiting and retaining our
highly skilled workforce. We
aim to increase the number
of training days per employee.
Our progress in 2020/21
46%
2021 target: 70%
1:20
2021 target: 1:50
4.0
2021 target: 4.5
Committed to diversity
and inclusion
Women across our industry are making a huge contribution
in helping to deliver major engineering programmes.
As part of its ongoing commitment in celebrating women’s
achievements and in creating equal and fair opportunities,
AmcoGiffen has signed up to the Railway Industry Association
and Women in Rail Equality, Diversity & Inclusion Charter
which champions best practice in working together to build
a high-performing rail sector.
Our values in action
Read more about our values
on page 20
52
Renew Holdings plc Annual Report and Accounts 2021
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Employee wellbeing
All the Group’s subsidiary businesses provide an Employee
Assistance Programme to support our employees on a range of
topics including finance, childcare, general health matters and
mental health.
Mental health awareness continues to be a focus across the
Group. At Seymour, the leadership team took part in an accredited
Level 2 Mental Health Awareness course delivered through its
in-house Skills Academy with plans to roll out the course content
across its workforce.
Many of our businesses have mental health champions, in addition
to mental health first aiders, who provide additional support to
our employees.
Employee engagement
Employee engagement initiatives include workshops, newsletters,
social events, social media, team briefings, employee surveys and
training and development opportunities.
As part of the employee engagement forum at AmcoGiffen, it was
suggested a “Cycle to Work” salary sacrifice scheme be set up.
The scheme now provides options for employees to choose
cycles or equipment to help with healthier journeys to work.
As well as promoting diversity and
inclusion generally, a number of our
businesses took part in events for
National Inclusion Week to raise
awareness of the issues faced by the
business and the wider industry in
creating a more diverse and inclusive
working environment.
Paul Scott
Chief Executive Officer
Positive communications
Walter Lilly has implemented an internal digital
platform for employees which provides the tools
needed to further improve two-way communication
and collaboration across the business.
This central hub has become a focal point for employees
to access the latest company news, informal wellbeing
guidance and details of staff benefits.
Our values in action
Read more about our values
on page 20
Working
together
Renew, inspiring
successful executives
“RISE”
Recognising that our biggest asset is our people,
the Renew Executive Leadership Programme, “RISE”,
has been launched. The programme focuses on
managing relationships, developing strengths,
building diversity, setting direction and leadership
and is a mix of workshops, online learning modules,
virtual collaborative events and mentoring.
The programme supports our commitment to
promoting leadership talent from across our business.
Our values in action
Read more about our values
on page 20
Renew Holdings plc Annual Report and Accounts 2021
53
Sustainability continued
Support local
communities
During the year the Covid-19 pandemic has greatly impacted the
frequency with which our employees have been able to engage
in community events.
Our targets
To support the local
communities in which we
operate, we measure the
working hours per employee
we spent assisting community
projects.
We support a range of
community events; in particular
we target increasing the
number of STEM events we
support each year.
Our progress in 2020/21
0.30
2021 target: 24
15
2021 target: 50
Volunteers continue Enfield
Lock enhancements
A team of volunteers from J Browne’s Enfield office
completed refurbishment works on Enfield Lock on the River
Lee Navigation. This section of canal, which J Browne has
adopted through the Canal and River Trust, is a significant
habitat for wildlife. The section has a houseboat community
nearby and the towpaths are regularly used by the local
community for dog walking.
Our values in action
Read more about our values
on page 20
54
Renew Holdings plc Annual Report and Accounts 2021
Future skills
Our businesses offer a range of training and development
opportunities including work experience placements, internships,
trainees and graduate roles all designed to assist the next
generation and develop them personally and professionally.
During the year, whilst working on a National Highway scheme at
Chowns Mill, Carnell hosted a careers event for local people who
were interested in entering the industry.
As part of a mains replacement scheme for Bristol Water in
Butleigh, Somerset, Lewis Civil Engineering invited pupils from
the local primary school to create a time capsule and learn more
about the nature of the water works.
Shepley Engineers hosted a virtual stand at the 2021 Cumbria
Careers Fair which saw it answer students’ questions about life
after school and post-16 options.
Apprenticeships are a key part of the workforce at Shepley, which
has over 40 apprentices across the group. This gives a great route
for aspiring young adults looking to develop themselves, offering
not only educational skills but also practical hands-on and delivery
experience. Apprentices at Shepley are working towards
qualifications in pipefitting, welding, plating, erecting, electrical
disciplines and business administration.
Community engagement
We encourage our employees to reflect our culture of responsible
working in their day-to-day operations.
During the year the Covid-19 pandemic has greatly impacted the
frequency with which our employees have been able to engage in
volunteering for their local communities. We hope to improve on
this in 2022.
Working for Network Rail in the East Midlands, the site team saw an
opportunity to reduce its environmental impact and help a local
school by donating felled trees and bark chippings for reuse in the
school’s wildlife garden and den building activities. The team was
invited back to the school to talk to the children about the work
and how it ensures the protection of the local wildlife.
At Carnell, 13 employees completed a litter picking pledge as part
of the Great British Spring Clean contributing a total of 22.5 hours
of voluntary clean up work.
Charitable giving
Apprentices from QTS volunteered their time to undertake
renovation works for the KIND charity which helps children and
families across Merseyside cope with the effects of poverty. Works
included enhancing the nursery pupils’ play and learning area.
Shepley provided financial support to the Cumbria Community
Foundation during the year, continuing its long association with
the foundation. The foundation supports learning for local people
and works to make the community a better place in which to live.
During the year, Bee Unique in Cumbria received a grant to assist
with the hosting of special events for the local autism community.
At Seymour, volunteers delivered a new outdoor play and learning
area for Hetton Lyons Primary School in the North East, as well as
taking part in a question and answer session on engineering for
the children.
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Understanding our
responsibility to
our community
stakeholders
Development of innovative solutions often
has a wider impact than the obvious cost and
time efficiencies.
As part of its bespoke plant fleet, QTS developed
the “Vegetation Compactor”. This is a first-of-its-
kind Road Rail Vehicle on the UK rail network and
can hold up to ten times the traditional trailer load
thanks to its moveable sides with little impact on
the lineside ground or drainage systems.
Disturbance to wildlife is greatly reduced, as are noise
levels compared to conventional chainsaws and
woodchippers, which lessens the impact of vegetation
clearance works on our lineside neighbours.
Operating responsibly is central to the work we do.
Our values in action
Read more about our values
on page 20
At J Browne the team is
committed to taking tangible
measures to respect and
enhance the local community
and environment. During the
year, volunteers completed
refurbishment works on
Enfield Lock on the River Lee
Navigation as part of works
on a section of the canal they
have adopted.
Paul Scott
Chief Executive Officer
Renew Holdings plc Annual Report and Accounts 2021
55
Working
together
Following previously completed remedial work on a Northern Gas
Networks (“NGN”) site in West Yorkshire, VHE installed bird and bat
boxes as part of NGN’s “Home for Nature” scheme. VHE was also
pleased to sponsor the local community sports teams in Methley
which have around 300 junior players registered.
AmcoGiffen is developing its charity policy which will help focus
efforts and provide support across the local regions in which it
works. QTS continues to develop its youth athlete programme
which supports young people in achieving its sporting dreams.
One such star is Scott Quin, who competed on behalf of Team GB
at the Tokyo Paralympics, and hammer thrower Charlotte Payne,
who competed at the European U20 Championships in Estonia
during the year.
Lewis Civil Engineering supplied and built a new sports equipment
storage shed in partnership with Bristol Water for Bitton Youth
Club as part of our initiative to give back to the local communities.
Risk management
Insightful risk
management
The Group keeps its principal risks under continuous review and ensures those identified
risks are being effectively managed.
Risk management structure
The management of risk is overseen by the Board which reviews
and agrees the Group’s risk matrix including the identification
of new risks and opportunities and reviewing the Group’s
principal risks.
Our subsidiary businesses are governed by a system of controls
including our Group minimum standards which are audited
internally to ensure compliance in areas including risk management,
control environment and activities, information and communication,
and the evaluation of our ability to deliver robust commercial
risk management.
Operational and financial reporting is supported by monthly
management meetings attended by a senior Group representative,
Executive Management Committee meetings and monthly
Board meetings.
Board
• Review and agree risk profile
• Identify new risks
• Agree principal risks
Audit and Risk
Committee
• Review results of the internal audit
and process
• Review external audits
• Review Group risk register and
actions taken to mitigate risks
• Risk management reviewed in monthly
Executive
Directors
management reports
• Oversee Group minimum
requirements for risk
Operating
subsidiaries
•
Identify and control local risk
• Delivery of risk management processes
and procedures
• Risk mitigation
Principal risks
The Group’s principal risks are identified as
those risks which have the potential for the
highest impact on the Group. The Board
reviews the principal risks annually along
with the mitigation measures in place.
1 Major accident or hazard
2
Loss of a major customer
3 Major project loss
4
5
6
Cost inflation
Business continuity
and cyber risk
Management and
succession planning
Very
high
High
Medium
Low
Very
low
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4
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Medium
Low
Very
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High
Very
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Consideration of ESG issues
We consider the impact of ESG
related risks as part of the Group’s
risk management review process
and include consideration of risks
such as climate change and carbon
emissions, human rights, Board
diversity and the diversity of the
wider Group along with a number
of other social, environmental and
governance related risks.
During 2021/22 the Board will
undertake a detailed review of
ESG related risks and opportunities
to the business which will form
the basis of our Task Force on
Climate-related Financial
Disclosures reporting.
Read more about our
commitment to ESG
on pages 48–55
Covid-19
The Board continually reviews the
principal risks and uncertainties
affecting the Group in the context
of the impact of the Covid-19
pandemic.
Whilst the Board recognised that
the impact of Covid-19 increased
the overall risk environment, the
Board considered that the principal
risks and uncertainties remained
appropriate and therefore
unchanged.
The Board has taken additional
actions to address those risks
specifically arising from Covid-19.
Brexit
The Board continues to monitor
the risk of the impact of the UK’s
withdrawal from the European
Union and agrees it is unlikely
to have any material effect on
the performance of the Group
because Renew is a UK-only
business operating in markets
with long-term, non-discretionary
spending programmes. The Group
has very little exposure to European
supply chains or labour.
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Decrease
Increase
Same as last year
1
2
Major accident
or hazard
Loss of a major
customer
Risk trend
Risk trend
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
1
2
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1
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Governance oversight
• Executive Directors
• Renew senior management teams
• Group SHEQ Director
Governance oversight
• Executive Directors
• Renew senior management teams
• Subsidiary senior management teams
Risk and 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 reputation loss.
Risk and 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.
Tolerance to residual risk:
Reduce
Tolerance to residual risk:
Accept
Example mitigating actions
• Established and proven processes
and policies
Example mitigating actions
• Keeping close to our clients
• Responsive, compliant, safe, innovative
• Broad nature of the sectors in which
and proactive
we are engaged
• Directly employed safety practitioners
within our subsidiaries
• Advisors’ specialist knowledge of
the complex environments in which
they work
Change in the year
Taking account of the increasingly diverse
activities of the Group, the Board has
reassessed the impact of a major accident
or hazard during the year and the
investment in training; there has been
no change to this risk during the year.
Opportunity
We undertake a high volume of safety
training across our business. We directly
employ our workforce which together
means we are able to better control the
environment and the competencies of
the workforce we deploy.
• Delivery of innovative solutions
• 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. The acquisition of
J Browne has broadened the Group’s
customer base.
Opportunity
Having a number of larger clients means
we able to build strong relationships over
many years. We understand our clients’
long-term ambitions and assist them in
the delivery of these through our culture
of engagement.
Renew Holdings plc Annual Report and Accounts 2021
57
Risk management continued
Decrease
Increase
Same as last year
3
4
5
Major project loss
Cost inflation
Business continuity
and cyber risk
Risk trend
Risk trend
Risk trend
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
Link to strategy
Read more on pages 26 & 27
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5
2
3
4
1
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Governance oversight
• Executive Directors
• Renew senior management teams
• Subsidiary senior management teams
Governance oversight
• Executive Directors
• Renew senior management teams
• Subsidiary senior management teams
Governance oversight
• Executive Directors
• Group IT Director
• Subsidiary senior management teams
Risk and 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.
Tolerance to residual risk:
Accept
Example mitigating actions
• Rigorous project selection process
• 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
Progress has been made in the year to
close out a number of remaining legacy
issues. There remains the potential for
legacy claims from the discontinued
Allenbuild business. Given this, the
likelihood has moved from low to
medium for this risk.
Opportunity
In developing our rigorous selection
processes, the Group focuses on those
schemes that present the least risk to the
business. We have improved our record
keeping as a result of reviewing our risk in
this area and this has assisted the business
significantly in being able to accurately
review historical contracts.
Risk and potential impact
A risk of our employment and other
input costs increasing that we are not
able to pass on.
Tolerance to residual risk:
Reduce
Example mitigating actions
• Ensure that the contractual terms and
conditions are appropriate and properly
understood
• New contract vetting procedures are
robust and in line with the Group
Minimum Requirements
Change in the year
This risk has replaced the “Economic
conditions” risk as the Board agreed this
better represented the real time risk to the
business through changes to the economy.
The Board determined that the risk of cost
inflation is medium likelihood,
medium impact.
The Board recognises that there has been
a significant increase in the price of certain
materials and labour during the course of
the last financial year however the Group is
largely able to mitigate these increases due
to the short-term nature of our contracts
and our ability to recover these additional
costs through the contracts.
Opportunity
The review of our contract vetting
procedures and the improvements
undertaken in the year mean we
are more robust in our approach
in this area.
Risk and 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.
We recognise the importance of
maintaining the integrity of the business’
electronic communications and
management systems from both failure
and cyber attack.
Tolerance to residual risk:
Reduce
Example mitigating actions
• A business continuity approach
to disaster recovery
•
Industry best practice cyber attack
defence tools
• Automated off-site 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. There has been
no change to this risk.
Opportunity
We continue to reinforce our systems
which alongside user training and
awareness programmes means we are
exposed to less risk in this area.
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Management and
succession planning
Working
together
Risk trend
Link to strategy
Read more on pages 26 & 27
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3
4
Governance oversight
• Executive Directors
• Renew senior management teams
• Subsidiary senior management teams
• Group HR Director
• Nomination Committee
Risk and 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.
Tolerance to residual risk:
Reduce
Example mitigating actions
• Review of succession planning
and management in each of our
subsidiary businesses
• Review succession for the senior teams
in the short, medium and long term
Change in the year
The Group has further developed its
succession planning and diversity
procedures during the year and continues
to carefully monitor any changes at regular
intervals with our subsidiaries. There has
been no change to this risk.
Opportunity
The process of management and
succession planning allows the business
to reveal any vulnerabilities and skills gaps
which through appropriate mitigation
actions reduces the likelihood of sudden,
unexpected change.
Safely supporting the
hazardous nuclear
environment
Shepley Engineers delivered a significant safety
milestone during the year, surpassing 12 million
hours of work without recording a RIDDOR
Reportable incident at the Sellafield site in
Cumbria.This is a testament to the continuous focus
on safety, exemplary Health and Safety approach
and a reflection of every employees dedication to
maintaining the highest standards of safe working.
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Viability statement
Assessing the business
How Renew assesses its prospects
The Directors have conducted a review and assessed the
prospects and viability of the Group.
The assessment period
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 are due for refinancing by January 2024, which
is during the period being considered. It is highly likely
that the Board will be able to replace these facilities at
the appropriate time.
Assessment viability
The Directors confirm that they have a reasonable
expectation that the Group will continue in operation, meet
liabilities as they fall due and 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.
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Board of Directors
Creating the
right leadership
The members of the Board bring a range of expertise on issues of performance,
strategy and governance, which support the success of the group. The Board is
satisfied that, between the directors, it has an effective and appropriate balance
of skills and experience to deliver the Group’s long-term strategy.
Working
together
Creating the right culture through our
governance framework
The Group’s core values and governance framework form the
structure for embedding our culture. As a Group we have a set
of Group Minimum Requirements (“GMRs”) which each of our
subsidiaries are required to comply with.
The GMRs cover all aspects of the business operations and
ensure we maintain high standards across all areas including,
health & safety, financial control, ESG, information technology
and human resources.
Considering all our stakeholders
The Board carefully considers all of its
stakeholders in the decisions it made during the
year. The Board is conscious its decisions have
wide reaching consequences for a range
of stakeholders and seeks to ensure these
consequences are fully understood as part
of any decision making process.
Board Performance Evaluation
The Board understands the importance of
self evaluation and undertakes an annual
performance review of its members and
committees. The results of the review form the
basis of the annual Board improvement plans.
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Skills and experience
The Board regularly reviews the range of skills and experience of
its members through its annual Board performance evaluation
process. Identified skills or experience gaps form the basis of
future recruitment plans. More details of the Board’s skills and
experience can be found on pages 62 and 63.
The Board seeks to ensure that its range of skills and experience
are aligned with both its current and future requirements.
Diversity
In recent years the Board has worked hard to improve its diversity
profile. It recognised the lack of diversity that existed and the
limitations this would bring. The Group has increased its gender
and diversity profile through the recruitment of two new
Non-executive directors since 2019. Work continues to further
diversify the board, understanding the benefits that a well
rounded Board offers.
Leadership
The Group’s Chairman, David Forbes, has been in position for
10 years and, in accordance with best practice, has decided to
step down as Chairman and from the Board. David has worked
with the Board to identify the skills and experience required
of a prospective Chairman and the Board has commenced
an exercise to find a replacement.
The Board remains confident that this process will conclude in the
new year and that a strong candidate will be appointed. David has
agreed to remain as Chairman until that appointment is finalised
which is expected to be no later than spring 2022 at which point
David will step down from the Board.
In accordance with the Group’s normal rules, a resolution
approving David Forbes re-election as a Director will be put
to shareholders at the Annual General Meeting in 2022.
Board recruitment
The Board undertakes a rigorous recruitment process supported
by external specialist advisors to identify potential Board
candidates that have the necessary skills and experience
to compliment the existing team.
Recruitment interviews are held by the Chairman and
a Non-executive Director. Further meetings are held to
introduce potential candidates to the rest of the Board.
How the Board add value
The Board adds value by providing advice to the executive team
and in presenting challenge as appropriate. The Board works on
behalf of the Group’s shareholders and brings a wide range
of experience and assistance across a broad range of topics.
These skills and experience of the Board members support the
achievement of the Group’s medium and longer-term objectives.
How the Board works together
The Board, led by the Chairman, usually meets at least nine times
a year in person unless this is not practicable. The Board reflects
on the results of the period presented, reviews progress of agreed
strategic implementation goals and discusses points raised by
the executive team. The Board discuss, support and challenge
the executive team as necessary.
Outside of the formal Board meetings the Board provides
additional support as required. An example of this would be
through the Covid-19 pandemic. The executive team received
guidance and support in their decision making processes and
in navigating what was an unprecedented situation.
Succession planning
The Board undertakes an annual succession planning process
and more frequently as situations dictate. Succession planning
it’s undertaken by the Group’s Nomination Committee, chaired
by David Forbes.
Board meetings held on the year
11
Board site visits
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Board of Directors continued
Our Board
1
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1. David Forbes
Chairman
Appointment date:
Non-executive Director from June 2011.
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:
11 out of 11.
Sector experience:
Construction, retail, engineering,
communications and support services.
2. Shatish Dasani
Non-executive Director
Appointment date:
Non-executive Director from February 2019.
3. David Brown
Non-executive Director
Appointment date:
Non-executive Director from April 2017.
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
former chief executive of The Go-Ahead Group
and Go-Ahead’s London Bus business.
External appointments:
Director of the Rail Delivery Group Limited.
Skills brought to the Board:
Transport industry experience.
Number of Board meetings attended:
10 out of 11.
Sector experience:
Transport.
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 Forterra
plc and 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:
Chair of Unicef UK. Non-executive Director
at SIG plc and Speedy Hire plc.
Skills brought to the Board:
Strategy development and execution,
performance improvement, financial
management, corporate finance, mergers
and acquisitions.
Number of Board meetings attended:
11 out of 11.
Sector experience:
Building materials, advanced electronics,
general industrial, business services
and infrastructure.
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4. Stephanie Hazell
Non-executive Director
Appointment date:
Non-executive Director from 1 March 2020.
Experience:
Over 20 years’ relevant experience working
in high profile businesses including
PricewaterhouseCoopers LLP, Orange SA,
Virgin Management Ltd and National Grid Plc
where she held the position of director, strategy
and corporate development.
External appointments:
Non-executive Director at NSMP Limited
and Neos Networks. Senior Advisor to Shell
Renewables and Energy Services.
Skills brought to the Board:
Infrastructure, strategy, business development
and M&A experience.
Number of Board meetings attended:
5. Paul Scott
Chief Executive
Appointment date:
As Chief Executive from 1 October 2016,
previously as Group Engineering Services
Director from 21 July 2014.
Experience:
A qualified engineer who has been with
the Group for over 21 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.
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.
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Audit and Risk Committee
Remuneration Committee
Nomination Committee
Chairman
Experience and skills
The Board has a complementary
range of skills which are relevant
to the Group’s medium and
longer-term objectives.
Regulated markets
10 out of 11.
Sector experience:
Utilities and telecoms.
Number of Board meetings attended:
11 out of 11.
Infrastructure
Sector experience:
Highly experienced across the UK Infrastructure
sectors that remain our strategic focus.
Corporate governance
Financial
Strategy and development
6. Sean Wyndham-Quin
Chief Financial Officer
Appointment date:
Appointed to the Board on 8 November 2017.
Appointed Chief Financial Officer on
29 November 2017.
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.
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:
11 out of 11.
Sector experience:
A broad range of experience across a number
of sectors including support services and
construction.
7. Andries Liebenberg
Executive Director
Appointment date:
Appointed as Executive Director on
31 March 2016.
Experience:
Previously managing director of Renew
subsidiary AmcoGiffen, Andries has been
with the Group for over eleven years. Prior to
this Andries 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:
Experienced in strategic business management
including mergers and acquisitions.
Number of Board meetings attended:
11 out of 11.
Sector experience:
Multidisciplinary infrastructure project
delivery with a bias towards Rail, Energy
and Environmental sectors.
Renew Holdings plc Annual Report and Accounts 2021
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Statement of corporate governance
Committed to
high standards
of governance
Dear Shareholder,
The last 18 months has been turbulent for the UK. Businesses have
faced unprecedented challenges and the Covid-19 pandemic has
highlighted the critical role governance plays in a business.
The Board of Renew has continued to uphold the highest
standards of corporate governance and as part of this continues
to comply with the Quoted Companies Alliance (“QCA”) Corporate
Governance Code 2018 to the extent considered appropriate for
a company of this size. In many areas we exceed and continue to
improve on the requirements of the Code where we are able to.
Details of how Renew complies with the code or an explanation
as to why it does not is included on the following pages.
We also recognise we are able to go further and during the
year we undertook a benchmarking process against the 2018
Corporate Governance Code. This identified areas that, as a
Board, we felt we could comply with that would add value to
our reporting. Some of the results of that exercise can be seen
in the additional disclosures contained in this Annual Report.
Shareholder engagement
Myself and the rest of the Board continue to welcome the views of
all our shareholders. During the year we have communicated with
our shareholders through the delivery of our results information,
and the Company’s Annual General Meeting (“AGM”). Outside of
these events, I can be contacted by email at chairman@
renewholdings.com.
Future focus
The Board remains focused on improving the diversity of the
Board and the wider Group as well as developing our response
to climate change and ESG activities as we move through 2022.
David Forbes
Chairman
9 December 2021
David Forbes
Chairman
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Board induction process
The Board has a robust induction process led by the
Chief Executive Officer. New Board members are
provided with:
• a comprehensive set of documents to facilitate their
understanding of the Group including, amongst others,
minutes of previous meetings, overview of Committees
and their membership, the Group’s three year Strategic
Plan, details of the Group’s subsidiary businesses,
organisation charts and details of the executive team;
• detailed meetings with the Chief Executive Officer to
outline how the business operates based around the
Group’s Strategic Plan and covering in detail areas such as
health and safety, risk management, strategy and culture;
• an introduction to the senior team; and
• a site visit to a Group subsidiary business shortly following
their appointment.
Whilst the core elements of the on boarding process are the
same for all new Board members, the process is also flexible
to take account of a new member’s Board experience.
This approach ensures the process fits the needs of each
new member.
Principle 1: Establish a strategy and business model
which promote long-term value for shareholders.
Read more about how we manage risk to ensure the
successful delivery of our strategy on pages 56–59
Read more about our strategy on pages 26 & 27
Read more about our business model on pages 20 & 21
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 Group’s AGM is provided to shareholders at
least 21 days in advance of the meeting. 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 find a link to the website of Link Group 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 Officer 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
December
January
May
Preliminary results roadshow
Annual General Meeting
Interim results roadshow
Read more about how we engage with our
shareholders on page 22
Principle 3: Take into account wider stakeholder and
social responsibilities and their implications for
long-term success.
Read more about how we engage with our stakeholders
on pages 22–25
Read more about how we deliver value for our stakeholders
on pages 20 & 21
Principle 4: Embed effective risk management,
considering both opportunities and threats, throughout
the organisation.
Read more about how we identify and manage risk on pages 56–59
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.
Renew Holdings plc Annual Report and Accounts 2021
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Statement of corporate governance continued
Principle 4: Embed effective risk management,
considering both opportunities and threats, throughout
the organisation. continued
Remuneration Committee
Read more about the Remuneration Committee’s key responsibilities
and activity during 2021 on pages 77–84
Internal controls continued
The Group has established a series of Group minimum
requirements in a number of financial, commercial and operational
areas 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 15 years and
including 2021, 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 Corporate Governance
Code 2018 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 D Dasani
S A Hazell
Non-executive Chairman
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Non-executive Director
Independent
Nomination Committee
Read more about the Nomination Committee’s key responsibilities
and activity during 2021 on pages 75 & 76
Audit and Risk Committee
Read more about the Audit and Risk Committee’s key responsibilities
and activity during 2021 on pages 72–74
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 11 times in the year ended 30 September
2021 with all Directors in attendance other than on two occasions.
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,
the Chief Executive Officer, two Executive Directors and three
independent Non-executive Directors.
The Board comprises four 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.
Brief biographies of the Directors can be viewed on pages 62 & 63
Read more about how our Board works on pages 60 & 61
P Scott
Chief Executive Officer
S C Wyndham-Quin
Chief Financial Officer
A P Liebenberg
Executive Director
Principle 6: Ensure that, between them, the Directors
have the necessary up-to-date experience, skills
and capabilities.
Board Committees
The Board operates with a number of Committees. Shatish Dasani
acts as Chairman of the Audit and Risk 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 and Risk
Committees. Each of the Board’s Committees has carefully
drafted terms of reference.
Brief biographies of the Directors can be viewed on pages 62 & 63
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.
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Our Board
Non-executive
Members
43%
Executive57+
57%
Up to 3 years
Length of tenure
1
7+ years57+
4
2
4–6 years
Diversity
1
Male
Female86+
6
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 new Non-executive Directors, a specialist
executive search agency will be engaged.
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 are key to delivering this
continuity. Each year the Board carries out its annual review of
succession planning at both Board and subsidiary business level
as part of its strategic review process.
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.
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.
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.
Every 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
undertaken in 2021.
It is the ambition of the Board that the evaluation of the Board will
be externally facilitated every three years to assess the Board and
its Committees to ensure they are equipped to support the
Group’s evolving requirements.
David Forbes, currently Chairman of the Company, has indicated
his desire to stand down as Chairman and from the Board. The
Nomination committee has undertaken an exercise to identify his
successor which is largely complete. A new Chairman is expected
to be appointed in the spring at which point David will stand down.
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.
Read more about our Board performance evaluation process
and how the Board works together on page 64
Principle 8: Promote a corporate culture that is based
on ethical values and behaviours.
The Board monitors and promotes its corporate culture assisted
by its senior management team which plays 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 Managers’ Conference, the Board can assess
the Group’s culture on an ongoing basis.
Read more about our culture on pages 42 & 43
Read more about our core values on page 20
Renew Holdings plc Annual Report and Accounts 2021
67
43
+
L
29
+
14
+
L
14
+
L
Statement of corporate governance continued
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.
Board and Committee meetings
The Board met 11 times during the year. 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 and Risk Committees. Each of the Board’s
Committees has carefully drafted terms of reference.
Remuneration Committee
Read about the Remuneration Committee’s responsibilities
and activity during 2021 on pages 77–84
Nomination Committee
Read about the Nomination Committee’s responsibilities
and activity during 2021 on pages 75 & 76
Audit and Risk Committee
Read about the Audit and Risk Committee’s responsibilities
and activity during 2021 on pages 72–74
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 2022.
Read more about how we manage risk on pages 56–59
Working together
To build a better understanding of our business – Board site visit to Luton Airport Parkway
The Board continues to look for ways to better understand the
business and its stakeholders. As part of this, the Board seeks to
undertake at least two site visits per year.
In June, the Board visited an AmcoGiffen rail site in Luton as part
of the new, above ground Direct to Air Rail Transit (DART) system.
The scheme is designed to transform the experience of those
travelling to Luton Airport by rail and will enable passengers to
travel from St. Pancras to the airport in just 30 minutes.
Working for Network Rail, on behalf of London Luton Airport, the
team designed and built a new pedestrian footbridge over the
railway tracks as well as providing the construction of associated
lifts and escalators on the operational platforms.
The Board met with the site team and were given a short
presentation on the scheme. Once personal protective
equipment was on, the Board were given a tour of the site
and a chance to ask questions.
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Board and Committee meetings
The Directors attended the following meetings in the year ended 30 September 2020:
D M Forbes
D A Brown
S A Hazell
S D Dasani
P Scott
S C Wyndham-Quin
A P Liebenberg
Main Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
11/11
10/11
10/11
11/11
11/11
11/11
11/11
3/3
3/3
3/3
3/3
—
—
—
4/4
4/4
3/4
4/4
—
—
—
4/4
4/4
4/4
4/4
—
—
—
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 11 times in the year ended 30 September
2021 with all Directors in attendance except for on two occasions.
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
Read about the Remuneration Committee’s responsibilities
and activity during 2021 on pages 77–84
Read about the Nomination Committee’s responsibilities
and activity during 2021 on pages 75 & 76
Read about the Audit and Risk Committee’s responsibilities
and activity during 2021 on pages 72–74
Shareholder engagement
Read more about how we deliver value for our stakeholders
on pages 22–25
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.
Shareholder voting
The table on pages 70 and 71 shows the votes cast at the 61st
Annual General Meeting of Renew Holdings plc which was held
at Thorpe Park Hotel on 27 January 2021 at 11.00am.
Due to the UK Government’s public health guidelines on
Covid-19 and in the interests of the safety and wellbeing of
our shareholders, shareholders were not permitted to attend
the 2021 Annual General Meeting in person.
Details on how to vote on the resolutions at the Annual General
Meeting and how to ask questions of the Board of Directors were
included in the Notice of Meeting.
Renew Holdings plc Annual Report and Accounts 2021
69
Statement of corporate governance continued
Working together
Our Board evaluation process
As part of the Board’s commitment to continuous improvement, a Board performance evaluation process is undertaken annually.
The evaluation looks at how the Board members feel they perform as individuals as well as how they interact with the rest of the
Board. The Board performance evaluation takes the form of an online questionnaire with the anonymised results reviewed by the
Chairman. Areas for further discussion or action are agreed at subsequent Board meetings. The last Board performance evaluation
took place in 2021.
Timeline for the 2022 Board performance evaluation process
January 2022
February 2022
March 2022
May 2022
June 2022+
Board performance evaluation survey distributed to Board members electronically.
Board performance evaluation survey responses received.
Confidential survey responses collated for Chairman’s review.
Key areas for discussion outlined at the Board meeting and an action plan agreed.
The Board will work through the areas raised in the Board performance evaluation process.
2021 Annual General Meeting voting results
Ordinary resolution 1
Voting for Voting against Voting withheld
To receive, approve and adopt the Company’s audited financial statements for the year ended
30 September 2020 and the reports of the Directors and auditor thereon.
44,153,395
13,630
5,637
Ordinary resolution 2
To declare a final dividend for the year ended 30 September 2020 of 8.33p per Ordinary Share
in the capital of the Company to be paid on 5 March 2021 to shareholders who appear on the
register at the close of business on 29 January 2021.
44,171,230
0
1,432
Ordinary resolution 3
To re-elect Sean Wyndham-Quin as a Director of the Company. Mr Wyndham-Quin retires as a Director
in accordance with the Company’s Articles of Association and offers himself for re-election.
43,377,859
117,346
677,457
Ordinary resolution 4
To re-elect David Brown as a Director of the Company. Mr Brown retires as a Director in
accordance with the Company’s Articles of Association and offers himself for re-election.
44,053,091
21,576
103,773
Ordinary resolution 5
To re-elect Stephanie Hazell as a Director of the Company. Ms Hazell was appointed as a
Director during the year and, in accordance with the Company’s Articles of Association,
retires as a Director and offers herself for re-election.
44,167,282
7,000
847
Ordinary resolution 6
To approve the Remuneration report for the year ended 30 September 2020.
42,914,640
1,044,022
217,858
Ordinary resolution 7
To appoint KPMG LLP as auditor of the Company.
43,771,846
399,497
5,319
Ordinary resolution 8
To authorise the Audit and Risk Committee of the Board of Directors of the Company
to determine the remuneration of the auditor.
44,009,599
113,006
54,057
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Renew Holdings plc Annual Report and Accounts 2021
Voting for Voting against Voting withheld
44,052,215
110,485
19,740
43,959,196
201,004
22,240
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709,769
13,425
Ordinary resolution 9
THAT the directors of the Company (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 in the capital of the Company (“Shares”) or
grant rights to subscribe for or to convert any security into Shares (“Rights”) up to a nominal amount
of £2,622,711 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 next Annual General Meeting of the Company or,
if earlier, at the close of business on 30 April 2022 (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 be granted after this authority expires and the Directors may allot such Shares
or grant such Rights pursuant to any such agreement as if this authority had not expired.
Special resolution 10
THAT, subject to the passing of resolution 9, the directors of the Company (the “Directors”) be
empowered to allot equity securities (as defined in the Companies Act 2006 (the “Act”)) for
cash under the authority given by resolution 9 and/or to sell Ordinary Shares held by the
Company as treasury shares for cash as if section 561 of the Act did not apply to any such
allotment or sale, such authority to be limited:
(A) in connection with an offer by way of rights issue or other pre-emptive issue to holders of
Ordinary Shares in the capital of the Company in proportion (as nearly may be practicable)
to their respective holdings of such shares, but subject to such exclusions or other
arrangements as the Directors may deem necessary or expedient in relation to fractional
entitlements, record dates, or any legal or practical problems under the laws of any territory,
or the requirements of any regulatory body or stock exchange; and
(B) to the allotment of equity securities or sale of treasury shares (otherwise than under
paragraph (A) above) up to a nominal amount of £393,406.
such power to expire at the end of the next Annual General Meeting of the Company or, if
earlier, at the close of business on 30 April 2022 but, in each case, prior to its expiry the
Company may make offers, and enter into agreements, which would or might require equity
securities to be allotted (and treasury shares to be sold) after the power expires and the
Directors may allot equity securities (and sell treasury shares) under any such offer or
agreement as if the power had not expired.
Special resolution 11
THAT, subject to the passing of resolution 9 above, the directors of the Company (the “Directors”)
be empowered in addition to any authority granted under resolution 10 to allot equity securities
(as defined in the Companies Act 2006 (the “Act”)) for cash under the authority given by
resolution 9 and/or to sell Ordinary Shares held by the Company as treasury shares for cash
as if section 561 of the Act did not apply to any such allotment or sale, such power to be:
(A) limited to the allotment of equity securities or sale of treasury shares up to a nominal amount
of £393,406; and
(B) used only for the purposes of financing (or refinancing, if the power is to be used within six
months after the original transaction) a transaction which the Directors determine to be an
acquisition or other capital investment of a kind contemplated by the Statement of Principles
on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior
to the date of this notice,
such power to expire at the end of the next Annual General Meeting of the Company or, if earlier, at
the close of business on 30 April 2022 but, in each case, prior to its expiry the Company may make
offers, and enter into agreements, which would or might require equity securities to be allotted (and
treasury shares to be sold) after the power expires and the Directors may allot equity securities (and
sell treasury shares) under any such offer or agreement as if the power had not expired.
By order of the Board
Sean Wyndham-Quin CA
Company Secretary
9 December 2021
Renew Holdings plc Annual Report and Accounts 2021
71
Audit and Risk Committee report
Our approach to
managing risk
In 2022, the Committee will
oversee the transition to the
new external audit firm as
well as continue to focus on
risk management and the
control environment.
Shatish Dasani
Chairman of the Audit and Risk Committee
Key responsibilities and terms of reference
• Monitor the integrity, clarity and completeness of the
financial statements, the half year report and any other
announcements relating to the Group’s financial
performance or position;
Focus in the reporting year
• Review of risk management framework
• External auditor tender process
•
Internal audit programme
• review and challenge, where necessary, the appropriateness
•
Introduction of whistleblowing policy
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;
Priorities for 2022
• Continued focus on risk management and the control
environment
• evaluate the effectiveness of the Group’s internal audit process;
• Delivery of the internal audit programme
• review the policies and process for identifying and assessing
business risks and managing their impact on the Group;
•
IT related risks including cyber security
• Overseeing transition to new external auditors
• review the Group’s systems and controls for preventing
bribery, fraud and ensuring compliance with relevant legal
and regulatory requirements;
• ensuring that the Group has adequate whistleblowing policies
and procedures; 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.
Membership
David Forbes
Shatish Dasani (Committee Chair)
David Brown
Stephanie Hazell
Meeting attendance¹
David Forbes
Shatish Dasani
David Brown
Stephanie Hazell
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1 There were three meetings held during the year ended 30 September 2021.
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Introduction
Dear Shareholder,
I am pleased to present the Audit and Risk Committee report for
the financial year ended 30 September 2021. The role of the Audit
and Risk 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 and Risk 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 set out above.
Committee composition
The Audit and Risk Committee consists of all four non-executive
directors and is chaired by me as an independent Non-executive
Director with recent and relevant financial experience. 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 and Risk Committee formally met on three occasions
since the date of the last report. The Chief Executive Officer,
the Chief Financial Officer and the Executive Director 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 and Risk 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:
• conduct a rigorous tender process for the external audit,
resulting in the proposal to appoint EY LLP as auditors for the
financial year beginning 1 October 2021;
• review 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 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 the Group’s internal control and risk
management systems;
• consider the external auditor’s audit plan, scope and coverage
of audit work, internal quality procedures and independence
and agree the audit fee;
• update the policy for the use of the external auditor to perform
non-audit services in order to ensure auditor independence and
objectivity; and
• agree changes to the terms of reference of the Committee in
order to clarify its responsibilities, including changing the name
of the Committee to include both audit and risk.
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
2020/21 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 intangibles recognised on acquisition
The acquisition of J Browne on 26 March 2021 and the acquisition
of REL on the 28 May 2021 required the valuation of separately
identifiable intangible assets which involved a degree of judgement.
An independent accounting firm Garbutt + Elliott was commissioned
to produce a report on this matter for J Browne which was reviewed
and approved by the Committee.
Renew Holdings plc Annual Report and Accounts 2021
73
Audit and Risk Committee report continued
Risk management and internal control
The Committee has undertaken a review of the Group’s financial,
operational and compliance controls and is satisfied that these
remain appropriate for the Group.
Policy on the provision of non-audit services
• Provision of certain non-audit services by the Group’s Auditors
are prohibited and must not be provided under any
circumstances.
A rolling program of internal financial audits are undertaken which
review the processes and procedures used in the Group’s financial
management. Undertaken by senior members of the finance
team, the findings can include recommendations for corrective or
preventive action. Results of the internal audits are reviewed with
the business and the Audit and Risk Committee. Each subsidiary
is audited at least once every three years and agreed actions are
monitored to ensure that they are completed on a timely basis.
External auditor tender process
In line with the Corporate Governance Code 2018, KPMG LLP
will resign as the Group’s audit firm at the conclusion of the 2021
audit process. In preparation for this, during 2021 the Committee
undertook a process to identify a new auditor. This thorough
process was concluded successfully and the Committee
proposed to the Board that EY LLP be recommended for
appointment as the Group’s auditor at the Annual General Meeting
in 2022. The Committee would like to thank KPMG LLP for their
services to the Group.
KPMG LLP has audited the Group’s accounts for the year
ended 30 September 2021. 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 that all significant accounting judgements
had been challenged robustly.
The use of the external auditor for performing non-audit services
is only permitted where the service is not prohibited by the FRC
Ethical Guideline and where the external auditor is best placed
to provide the service. In this case, the engagement needs to be
authorised in line with the policy agreed by the Committee which
is summarised below.
• Fees for permissible non-audit services should not exceed 70%
of the average audit fees paid in the last three consecutive
financial years with effect from 1 January 2020.
• A register is kept of all permitted non-audit services provided
by the Auditors and the fees agreed.
• Any individual engagement with a fee exceeding £10,000 or
where the cumulative fee for the calendar year would exceed
25% of the audit fee should be approved by the Chairman of the
Audit and Risk Committee.
• Any individual engagement with a fee exceeding £25,000 or
where the cumulative fee exceeds 40% of the audit fee should
be approved by the Audit and Risk Committee.
• Permissible non audit services are generally assurance related.
Audit related services are those non-audit services specified
in the FRC Ethical Standard 2019 that are largely carried out
by members of the audit engagement team, and where the
work involved is closely related to the work performed.
Fees of external auditor
During the financial year, the Group external auditor’s fees
were £893k (2020: £610k). The Committee confirms that no
non-audit services were undertaken by the Group’s auditor,
KPMG LLP, in the period.
Whistleblowing policy
During the year the Group introduced its whistleblowing policy
to ensure any fraud, misconduct or wrongdoing by employees
or officers of Renew is reported and appropriately dealt with.
The policy clearly sets out the procedure and protection for
whistleblowers and includes contact details for an independent
third-party whistleblowing helpline.
2022 and beyond
We are committed to providing the highest levels of oversight
to the Group’s reporting and control processes. In 2022, the
Committee will continue to focus on risk management and the
control environment in particular any potential IT related risks and
cyber security. The Committee will also oversee the transition to
the new external auditor.
Approval
The Audit and Risk Committee report was approved by the Board
on 9 December 2021 and signed on its behalf by:
Shatish Dasani
Chairman of the Audit and Risk Committee
9 December 2021
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Nomination Committee report
A forward
thinking Board
The Nomination Committee
will continue to focus on
ensuring the Board retains
the appropriate set of skills,
experience and diversity that
is required to execute the
Group’s long-term strategic
plan, supporting the continued
success of the Group.
David Forbes
Chairman of the Nomination Committee
Key responsibilities and terms of reference
• Review the structure, size and composition of the Board
Priorities for 2022
• Continue to develop the Group’s approach to diversity
and its Committees
and inclusion
• Review skills, knowledge, experience, and diversity
• Review skills, knowledge, experience and diversity
of the Board
of the Board
•
Review of time commitments and external directorships
• Succession planning for Directors and senior executives
•
Succession planning for Directors and senior executives
• Onboarding of new non-executive director
•
Keep under review the leadership needs of the organisation,
both Executive and Non-executive
• Complete the appointment of a new Chairman for the Group
•
Leadership talent development
•
Board performance evaluation
•
Committee effectiveness and terms of reference
Membership
David Forbes (Committee Chair)
Shatish Dasani
David Brown
Stephanie Hazell
Focus in the reporting year
• The appointment of a new Non-executive Director to
Meeting attendance¹
the Board
• Continued QCA Corporate Governance Code compliance
• Board and senior management succession planning
• Board performance evaluation
David Forbes
Shatish Dasani
David Brown
Stephanie Hazell
• Undertake a process for the identification and appointment
1 There were four meetings held during the year ended 30 September 2021.
of a replacement Chairman
Renew Holdings plc Annual Report and Accounts 2021
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Nomination Committee report continued
Gender pay gap
The Board is committed to treating all employees equally. The
engineering sector has traditionally been male dominated and,
as a result, this is reflected in the gender pay profile of our
business. We will be working with our subsidiaries to further
develop our roadmap to improving our gender pay profile
through 2022.
Assessment of independence of the
non-executive directors
The committee undertakes an annual assessment of the
independence of our non-executive directors. The committee
was satisfied all the non-executive directors remained independent
in the period with the exception of David Forbes, the Group’s
Chairman, due to a Board tenure exceeding 10 years. After
consideration, the Board is confident David remains independent
in his judgement and is committed to his role on the Board.
Time commitments and external appointments
of non-executive directors
The committee reviewed the non-executive directors’ time
commitments and external appointments during the year and
confirms that the non-executive directors have sufficient time
to be able to fulfil their Group responsibilities. The committee
did not identify any instances of overboarding.
Retirement by rotation
David Forbes and Andries Liebenberg will retire from the Board
by rotation at the Group’s AGM in 2022 and offer themselves
for re-election.
2022 and beyond
The Nomination Committee will continue to focus on ensuring the
Board retains the appropriate set of skills, experience and diversity
that is required to execute the Group’s long-term strategic plan,
supporting the continued success of the Group.
David Forbes
Chairman of the Nomination Committee
9 December 2021
Introduction
Dear Shareholder,
As Chairman of the Nomination Committee, I am pleased to
present my report on the committee’s activities during the year.
Board changes
There have been no Board changes in the year ending
30 September 2021. Since the year end Louise Hardy has been
appointed as a Non-executive Director.
Board effectiveness
During the year the committee undertook its annual Board
performance evaluation process to assess the performance and
effectiveness of the Board and its committees. The results of this
process has informed the Board’s plans for 2022.
Board composition and succession planning
The committee has reviewed the composition of the Board and
its committees to ensure they continue to have the appropriate
balance of skills and experience necessary to support the delivery
of the Group’s long-term strategy. Over the last two years the
Board has continued to develop its range of skills and experience
through the appointment of two non-executive directors.
Succession planning for the Board members and senior
executives is reviewed on an annual basis as part of the Group’s
strategic planning process. Succession for all identified roles is
reviewed for the short, medium and long term and the results of
this underpin the development of individuals at both Group and
subsidiary business level.
David Forbes, currently Chairman of the Company, has indicated
his desire to stand down as Chairman and from the Board. The
Nomination committee has undertaken an exercise to identify his
successor which is largely complete. A new Chairman is expected
to be appointed in the Spring at which point David will stand down.
During the year the Group launched its leadership development
programme ‘RISE’ (Renew Inspiring Senior Executives) which
will support the development of senior management talent
across the Group.
Diversity and inclusion
It is the Board’s view that a diverse membership enhances the
quality of debate and decision making to the benefit of all
stakeholders. The Board is keen for its membership to reflect
its wider workforce and the communities in which the Group
operates. The appointment of new members to the Board
considers the Board’s diversity requirements as part of the
overall recruitment requirements.
Over the last three years we have worked to improve the diversity
of the Board in its widest sense with two new appointments.
Diversity remained a focus throughout the year and, as part of this,
the committee undertook a recruitment process to appoint a new
non-executive director. Subsequent to the year-end, the Board
was pleased to announce the appointment of Louise Hardy with
effect from 9 December 2021. Louise brings complementary skills
and experience to the those of the existing Board members.
The Group works to support an inclusive culture across the
business and this will be a focus area during 2022 as we seek
to ensure our workforce better represents the diversity of the
communities in which we operate.
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Directors’ remuneration report
Rewarding good
performance
We continue to improve
our disclosures in line
with best practice and
commissioned an external
review of our policy during
the year.
• Reviewed Board and senior management remuneration
• Considered the suitability of introducing a share
ownership scheme
• External review of Non-executive remuneration policy
Priorities for 2022
• Consider and implement the recommendations arising
from a review of Renew’s Remuneration policy undertaken
by PwC on behalf of the Company in 2021
• Ensure continued compliance with the QCA Corporate
Governance Code 2018 and continue to develop best
practice disclosures
Membership
David Forbes
Shatish Dasani
David Brown (Committee Chair)
Stephanie Hazell
Meeting attendance¹
David Forbes
Shatish Dasani
David Brown
Stephanie Hazell
1
There were four meetings held during the year ended 30 September 2021.
Renew Holdings plc Annual Report and Accounts 2021
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David A Brown
Chairman of the Remuneration Committee
Key responsibilities and terms of reference
• 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;
• Review and approve the design of all share incentive plans
and performance related pay schemes for approval by the
Board and shareholders as applicable;
• Determine targets and awards made under share incentive
plans and performance related pay schemes;
• Determine the policy for, and scope of, pension arrangements
for each Executive Director and other senior executives; and
• Ensure that the contractual terms and payments made on
termination are fair to the individual and the Company and
that failure is not rewarded.
Focus in the reporting year
• Ensured continued compliance with best practice and the
QCA Corporate Governance Code 2018
• Set targets for the 2020 LTIP award and 2021 annual
performance-related bonus
• Approved the 2020 annual performance-related bonus
payout and vesting of the 2017 LTIP award
• Approved the 2021 Directors’ remuneration report
Directors’ remuneration report continued
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 2021.
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 2021 and proposed remuneration for the year
ended 30 September 2022.
The auditor is not required to report to the shareholders on the
Remuneration report. The Remuneration report will be presented
at the Annual General Meeting on 26 January 2022 and will be the
subject of an advisory vote.
During the year the Committee reviewed the Group’s
remuneration policy to ensure that the policy continues to be
appropriate for the Company at its current stage of development,
that it remains aligned to both shareholders’ and other key
stakeholders’ interests and continues to support our long-term
business strategy, values, and culture. During the year, the
committee also commissioned an external review of the Group’s
remuneration policy which was undertaken by PwC LLP.
Corporate governance
As an AIM company, whilst we are not required to prepare this
Remuneration Report in accordance with the UK Corporate
Governance Code 2018, we follow it to the fullest extent
considered relevant/appropriate for an AIM listed company
of our size. The Remuneration Committee will continue to
ensure that this report provides disclosures that meet best
practice for AIM listed companies.
Over the last year the committee has continued to ensure it
remains closely aligned with the QCA Remuneration Committee
guidance. The committee also during the year undertook a
benchmark exercise of the Group’s compliance with the UK
Corporate Governance Code 2018 which has resulted in additional
disclosures on Chief Executive pay ratio and director’s shareholdings.
Remuneration Committee
The Remuneration Committee is chaired by David Brown (Senior
Independent Director) and comprises David Forbes, Stephanie
Hazell and Shatish Dasani. The Committee held four meetings
during the financial year to discuss remuneration arrangements.
At the 2021 Annual General Meeting, votes on the advisory
resolution relating to the Remuneration report were cast as follows:
In favour
Against
Withheld
42,914,640
(97.1 per cent)
1,044,022
217,858
(2.4 per cent)
(0.5 per cent)
Total votes cast
44,176,520
(100 per cent)
Engagement with shareholders
We encourage our shareholders and representative bodies to
engage with the Remuneration Committee at any time. This helps
inform the committee’s decision making process.
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.
b.
c.
d.
e.
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;
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;
to determine targets and awards made under share incentive
plans and performance related pay schemes;
to determine the policy for, and scope of, pension
arrangements for each Executive Director and other senior
executives; and
to ensure that the contractual terms and payments made on
termination are fair to the individual and the Company and
that failure is not rewarded.
Non-executive Directors do not have any personal interests
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 long-term strategic objectives, including
the creation of sustainable shareholder returns, without making
excessive payments. The annual performance-related bonus
rewards Executive Directors for delivering our short-term financial
and operational goals. The long-term focus of our strategy is
supported through our LTIP under which performance is tested
over three years.
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. For guidance,
the Remuneration Committee refers to published survey data.
The Executive Directors determine 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.
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Basic salary and benefits
Basic salaries are reviewed annually by the Remuneration
Committee and are adjusted where the committee believes that
adjustments are appropriate to reflect performance and changed
responsibilities. The 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.
How this links to the Group’s strategy – This enables the Group
to attract, retain and motivate the best candidates to deliver the
Group’s strategic objectives.
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 in the following pages.
by 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 percent 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
shareholders all whilst preserving the overall economic effects
of the LTIP award.
At the discretion of the Remuneration Committee, the LTIP rules
allow for the amount of dividends paid during the vesting period
that are applicable to the number of shares over which the option
has become exercisable, to be paid to the LTIP participants once
the LTIP has vested. This payment can be made as either a cash
payment or in the form of additional shares.
How this links to the Group’s strategy – The bonus award
incentivises Executive Directors to drive the in-year performance
of the business and rewards strong performance, thereby driving
longer term shareholder returns.
How this links to the Group’s strategy – The LTIP scheme
closely aligns a material part of an executive director’s
remuneration with the delivery of the Group’s long-term
strategy and shareholder returns.
Long Term Equity Incentive Plans
The Remuneration Committee implemented a long term incentive
plan (“LTIP”) which was approved at an extraordinary general meeting
(“EGM”) held on the 25 January 2012. The LTIP has been designed so
as to comply with ABI guidelines in all material respects.
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
is 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 or 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% 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 is no vesting if aggregate TSR growth
over the three-year performance period is 25% or less.
The relative TSR target requires the company’s TSR performance
over the three-year period to be better than the median TSR
performance of the comparator group. There is no vesting if the
relative TSR is less than the median of the TSR comparator group.
If the company’s relative TSR perform this is in the top decile of
the TSR comparator group, then 100% of this portion of the LTIP
will vest. Relative TSR performance between the median and the
top decile will result in the LTIP vesting on a straight-line basis.
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
Pension arrangements
Under their terms of engagement, the executive directors are
entitled to receive an annual pension contribution of 15% 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. This
arrangement is currently being reviewed as part of the external
PwC review.
Executive Director minimum shareholding requirement
The executive directors are required by the Committee to build
up and hold a minimum of 100% 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.
How this links to the Group’s strategy – This aligns the
financial interests of the executive directors with those
of the Group’s shareholders.
Discretion
The committee applies the exercise of discretion very carefully
when considering the total amounts earned under the annual
performance related bonus and LTIP, including the overall
performance of the Group, health and safety performance
and any exceptional factors.
When determining the future vesting of any LTIP awards,
the committee will carefully consider whether any discretion
is required to ensure outcomes are fair and appropriate.
Renew Holdings plc Annual Report and Accounts 2021
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Directors’ remuneration report continued
Remuneration for the year ended 30 September 2021
During 2021, the Group’s remuneration policy operated as intended by the committee. Full details of the relevant targets and
performance achieved are set out on pages 78 to 81.
The committee recognises and appreciates the hard work and contribution of the executive directors throughout the full financial year.
The committee believes that the 2021 pay outcomes are appropriate in the context of aligning the executive directors’ interests with
those of our stakeholders at this time.
Remuneration policy review
During the year, the Committee commissioned PwC LLP (“PwC”) to conduct an external review of the Group’s Remuneration policy.
The comprehensive review looked at all aspects of the Remuneration Committee processes, including planning and approval processes,
the executive director remuneration structure, Non-executive Director fees and alignment to best practice corporate governance codes.
As part of the review, PwC undertook a quantum benchmark of the executive director roles relative to the marketplace. This benchmarking
with our comparator Group showed a disparity in the Chief Executive Officer and Chief Financial Officer’s remuneration which the
committee will review during 2022.
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 12-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 the re-election by shareholders at least every three years.
The service contracts of the directors who served during the year ended 30 September 2021 and were in post on that day include the
following terms:
Directors
D M Forbes
D A Brown
S D Dasani
S A Hazell
P Scott
A P Liebenberg
S C Wyndham-Quin
Executive/Non-executive
Date of contract
Unexpired term
Non-executive
Non-executive
Non-executive
Non-executive
Executive
Executive
Executive
1 June 2011
2 April 2017
8 February 2019
1 March 2020
1 July 2014
31 March 2016
8 November 2017
Rolling one month
Rolling one month
Rolling one month
Rolling one month
Rolling one year
Rolling one year
Rolling one year
Directors’ remuneration
Information is provided below for directors who served during the financial year and as at 30 September 2021.
Notice period
(months)
1
1
1
1
12
12
12
Notes
Salary/fees
£000
Bonuses
£000
Executive Directors
P Scott
1,2,3,4,5,8
A P Liebenberg
2,3,4,5,8
S C Wyndham-Quin
2,3,4,5,7,8
Non-executive Directors
D M Forbes
D A Brown
S D Dasani
S A Hazell
Notes:
8
8
8
6,8
314
225
240
78
47
47
47
359
261
274
—
—
—
—
LTIP
£000
274
204
204
—
—
—
—
Total
emoluments
2021
£000
Benefits
£000
Increase
from
previous
year %
Total
emoluments
2020
£000
63
55
54
—
—
—
—
1,010
745
772
2,527
78
47
47
47
2,746
21
22
63
4
7
7
7
833
609
474
1,916
75
44
44
25
2,104
1. The highest paid director for 2021 was P Scott, who received emoluments of £1,010,000 (2020: £833,000).
2. Bonuses were earned by P Scott, A P Liebenberg and S Wyndham Quin during the current financial year and will be paid in the year ending 30 September 2022.
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. S Hazell was appointed as a Non-executive Director with effect from 1 March 2020 and so the comparative emoluments represent the period from 1 March 2020 until
30 September 2020.
7. The disproportionate increase in total emoluments is as a result of the first year of options vesting under LTIP since becoming Chief Financial Officer.
8. The overall increase from the previous year is distorted due to the salary reductions taken in year ended 30 September 2020 as a result of Covid-19.
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Total single remuneration figure for 2021 (£000)
The total single remuneration figure for our executive directors for the year ended 30 September 2021 is shown below.
Chief Executive Officer, P Scott
Executive Director, A P Liebenberg
Chief Financial Officer, S C Wyndham-Quin
2021
£000
1,010
745
772
2020
£000
833
609
474
Annual bonus awards
The company provides a bonus incentive scheme for executive directors, the majority of which is based on two challenging measures.
Operating profit target
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 met that target then the executive directors were entitled to receive an annual bonus equal to
100% 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% of salary being paid if the performance exceeds the target by 30% with no bonus being payable if
performance was 50% or more below target. Any bonus payable in excess of 100% of basic salary will be paid in shares and will be
subject to the minimum shareholding requirements set out in this report. However, the Remuneration Committee can in exceptional
circumstances, and at its discretion, make the payment in cash. The Remuneration Committee make 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 2021 the Remuneration Committee agreed a target for operating profit before
exceptional items for the group of £42,618,000. This was revised to £44,769,000 following the acquisition of J Browne in March 2021.
The operating profit before exceptional items for the group was £51.2m and therefore exceeded this target by 14.4%. Accordingly, under
the terms of the scheme, the executive directors are entitled to receive an annual bonus equal to 114.4% of salary.
Health and Safety target
The annual bonus award includes a review of health and safety performance over the reporting period. The committee is able to use its
discretion to reduce bonus payments in line with performance. The Group maintained its health and safety performance during the year
and therefore no reduction in annual bonus award was necessary.
Long-term equity incentive plans
The market price of the company shares at 30 September 2021 being the last trading day of the month was 790p and the range of
market prices during the year was between 435p and 850p.
Information is provided below for directors who served during the financial year and as at 30 September 2021.
Pursuant to the long-term incentive plan LTIP, the board has granted options to the executive directors as set out in the following table:
Number of Ordinary Shares under option
Exercisable between
4 Dec 2021 and 3 Dec 2028
Exercisable between
18 Feb 2023 and 17 Feb 2030
Exercisable between
15 Dec 2023 and 14 Dec 2030
LTIP options
P Scott
A P Liebenberg
S C Wyndham-Quin
129,310
92,833
96,983
118,269
84,907
88,702
89,785
65,267
68,702
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. For consistency with previous years, the close of market on the Friday following
the group’s preliminary results announcement was used as a valuation point for the LTIP grant.
During the year, options awarded on 22 November 2017 amounting to 126,280 shares in aggregate, vested in accordance with their
vesting conditions. This represents 100% of the relative TSR measure and zero percent of the absolute measure in accordance with the
scheme rules are set out in the graph over. These options were subsequently exercised on 14 December 2020, and 50,820 shares were
issued to P Scott, 37,730 shares to A P Liebenberg and 37,730 to S Wyndham-Quin.
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Directors’ remuneration report continued
Shareholding requirement percentage of salary
Executive directors are encouraged to build up and hold their personal shareholding as soon as possible to ensure their financial
interests are aligned with that of our shareholders. The shareholding guidelines require executive directors to hold ordinary shares equal
in value to 100 per cent of their salary as set out in the graphs below.
Shareholding requirement % of salary
196%
101,565
Target
199%
Current shareholding
51,757
39,604
33,909
37,624
86%
74,941
Paul Scott
Sean Wyndham-Quin
Andries Liebenberg
Notes
The current shareholding as a percentage of salary has been calculated using the group chief executive’s, chief financial officer’s and
rail director’s full base salaries for year ending 30 September 2021 of £313,650, £240,000 and £228,000 respectively.
The value of the ordinary shares shown above has been based on the average share price between the period 30 September 2020
and 1 October 2021, being £6.06.
Unvested LTIP shares do not count towards satisfaction of the shareholding requirement, but the board note that, in addition
to the shareholdings, the executive directors also have an interest in the unvested share options detailed on page 81.
Renew Holdings TSR performance VS comparison group
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Threshold
Maximum
Renew Holdings
30/09/2017
31/03/2018
30/09/2018
31/03/2019
30/09/2019
31/03/2020
30/09/2020
In addition, and in accordance with the rules of the LTIP payments of £13,976, £10,376 and £10,376 were made to P Scott, A P Liebenberg
and S Wyndham Quin in shares 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 £260,198, A P Liebenberg made a gain on
exercise of options of £193,178 and S C Wyndham-Quin made a gain on exercise of options of £193,178.
Post the period end, on 4 December 2021, 319,972 options awarded on 3 December 2018 vested in accordance with their vesting
conditions but have not yet been exercised. During the year £258,000, (2020: £244,000) was charged/credited to the income
statement with a corresponding (credit)/charge to the share-based payment reserved in accordance with IFRS 2. Performance
criteria for the vesting of the share options under the LTIP are set out in the remuneration policy above and in note 24 to the accounts.
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Total shareholder return (TSR) performance graph 2018–2021
The graph over shows a comparison of Renew Holdings plc cumulative TSR against that achieved by AIM for the last three financial
years to 30 September 2021. The chart shows cumulative TSR over the same period for the Group’s TSR comparator businesses.
250
200
150
100
50
0
Sep 18
Dec 18
Mar 19
Jun 19
Sep 19
Dec 19 Mar 20
Jun 20
Sep 20
Dec 20
Mar 21
Jun 21
Sep 21
Renew Holdings plc 115.1%
Keller Group plc 9.2%
MITIE Group PLC (2.4%)
Costain Group PLC (84.8%)
Morgan Sindall Group plc 99.0%
Kier Group plc (84.0%)
Balfour Beatty plc 2.2%
Nexus Infrastructure Plc 29.5%
Galliford Try Holdings PLC 96.8%
Marlowe Plc 54.8%
Babcock International Group PLC
(44.5%)
FTSE AIM All-Share 17.1%
Chief Executive Officer historical remuneration
The table below shows the remuneration of the Chief Executive Officer over the five-year period to 30 September 2021.
Chief Executive Officer’s remuneration over the last five years
The total remuneration figure includes the performance-related bonus and LTIP awards.
Year ended 30 September
Group Chief Executive
Single total
remuneration figure
£000
Annual performance-
related bonus
£000
Long term incentive vesting
£000
2021
2020
2019
2018
2017
Paul Scott
Paul Scott
Paul Scott
Paul Scott
Paul Scott
1,010
833
797
663
473
359
270
309
163
142
274
208
127
155
—
Chief Executive Officer pay ratio
The table below sets out the ratio of the Chief Executive Officer to the equivalent base salary pay for the lower quartile, median and
upper quartile of the Group’s employees (calculated on a full-time basis). The ratios have been calculated in accordance with The
Companies (Miscellaneous Reporting) Regulations 2018.
Year ended
30 September
2021
Method option
25th percentile pay ratio
50th percentile pay ratio
75th percentile pay ratio
A
13:1
10:1
7:1
1. “Option A” methodology was selected on the basis that it provides the most robust and statistically accurate means of identifying the
median, lower quartile and upper quartile colleagues.
2. The workforce comparison is based on actual payroll data for the period 1 October 2020 to 30 September 2021.
3. Part time workers have been included by calculating the full-time equivalent value of their base pay.
4. Leavers, joiners and employees on reduced pay (due to sick pay, maternity leave, etc.) have been included.
Directors’ pension information
No director has pension entitlements under the groups 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 P Liebenberg,
and S C Wyndham Quin, received a sum equivalent to 15% of their basic salary in lieu of pension contributions from the company. Under
the terms of engagement, the executive directors are entitled to receive an annual pension contribution of 15% 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.
Renew Holdings plc Annual Report and Accounts 2021
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Directors’ remuneration report continued
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 2021 as follows.
Ordinary shares of 10p each.
D M Forbes
D A Brown
S D Dasani
S A Hazell
P Scott
A P Liebenberg
S C Wyndham-Quin
2021
35,000
7,042
15,000
4,476
101,565
74,941
33,909
2020
35,000
7,042
15,000
4,476
74,739
55,025
13,993
30 September
2019
35,000
7,042
5,000
—
47,412
33,371
11,628
2018
35,000
7,042
—
—
29,042
17,634
11,628
2017
20,000
—
—
—
5,000
—
—
External appointments
The Chief Executive Officer and Chief Financial Officer did not have
any external appointments during the year ended 30 September 2021.
contain an additional increase to reflect changes in responsibility
and market rates. There have been no material changes in the
benefits which the executive directors are entitled to receive.
Payments to former directors and payments for
loss of office
There were no payments made to former executive directors or
payments for loss of office during the year ended 30 September
2021 (2020: £Nil).
Employee share ownership scheme
During the year the committee reviewed the benefits of introducing an
employee share ownership scheme to allow the Group’s employees to
share in the success of the company. The committee debated the
suitability of such a scheme and for reasons relating to the Group’s
devolved business model, it was agreed such a scheme would not be
suitable in the short term but that this would be reviewed annually.
Remuneration for the year ending 30 September 2022
Non-executive Directors
Fees
The PwC benchmarking report commissioned during the year,
revealed a disparity between the existing fees and the benchmark/
market rates. The executive directors made a decision to
standardise the fees as follows effective from 1 October 2021:
Chairman
Non-executive Director
The following additional fees apply:
Senior Independent Director
Committee Chair
2021
£000
100
50
5
5
As a result of the standardisation of the non-executive directors’
fees, the Non-executive Director and Chairman fees increased by
6.4% and 28% respectively.
Executive Directors
Basic salary and benefits
The basic salary of P Scott has increased by 2.5% to £321,491
which is closely aligned to the average annual pay award across
the group as a whole. The basic salary of S C Wyndham-Quin
and A P Liebenberg increased by 2.5% to £246,000 and 2.5%
to £233,700 respectively. These increases are closely aligned to
the average annual pay award across the group as a whole and
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Renew Holdings plc Annual Report and Accounts 2021
Annual bonus awards
The structure of the annual bonus scheme for the year ending
30 September 2022 is the same as for the previous year as set
out above, in all material respects, except for the targets.
Operating profit target
Executive directors will therefore be entitled to receive a cash
bonus of 100% of their basic salary if the group achieves target
operating profit and a maximum of 130% of their basic salary if the
group achieved 130% of target operating profit. No bonus will be
paid if the group achieves 50% or less of target operating profit.
Any bonus payable in excess of 100% of basic salary will be paid
in shares and will be subject to the minimum shareholding
requirements set out earlier in this report. The operating profit
target for year ended 30 September 2022 will be stated in the
2022 Annual Report & Accounts.
Health and safety target
The annual bonus award will include a review of health and safety
performance over the reporting period. The committee will use its
discretion to reduce bonus payments in line with performance in a
manner that is fair to the individual and the company.
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 as soon as practicable 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 group’s annual results. Awards for each participant in
the scheme are limited in amount to 150 per cent of that participants
basic salary. The 8th tranche of options granted under the LTIP, granted
on 3 December 2018 as detailed above, vested on 4 December 2021
subject to the performance criteria contained therein.
Approval
The directors’ Remuneration report was approved by the board
on 9 December 2021 and signed on its behalf by:
David A Brown
Chairman of the Remuneration Committee
9 December 2021
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Directors’ report
The Directors present their report and the audited accounts for
the year ended 30 September 2021.
Principal activities
For the year ended 30 September 2021 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 2021
is listed in Note S to the Company’s financial statements.
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.
Results and dividends
The Group profit for the year after tax and after accounting for
discontinued operations was £30,463,000 (2020: £20,752,000).
The Directors recommend the payment of a final dividend on the
Ordinary Shares of 11.17p (2020: 8.33p) giving a total for the year
of 16.00p (2020: 8.33p).
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 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.
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 2021 £481,000
(2020: £439,000) 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.
Renew Holdings plc Annual Report and Accounts 2021
85
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 “toolbox 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, 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 44 to 55.
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Renew Holdings plc Annual Report and Accounts 2021
Directors
The Directors of the Company who served, or were appointed,
during the year and their brief biographical details are set out below.
Non-executive Directors
David Brown – Director, 60, was appointed to the Board on
3 April 2017. David was previously chief executive of The Go-Ahead
Group Plc, managing director of Surface Transport for Transport
for London and chief executive of Go-Ahead’s London Bus
business. David is a director of the Rail Delivery Group Limited.
David Forbes – Director, 61, was appointed to the Board as a
Non-executive Director in June 2011 and became Chairman in
January 2018. He qualified as a Chartered Accountant in 1984 and
has over 20 years’ experience in corporate advisory services with
N M Rothschild & Son Limited.
Shatish Dasani – Director, 59, was appointed to the Board as a
Non-executive Director in February 2019. He is currently Chair
of Unicef UK and a non-executive director of SIG plc and Speedy
Hire plc. 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. Previously he was the
chief financial officer of Forterra plc and TT Electronics plc and
has also been alternate non-executive director of Camelot Group
plc and public member at Network Rail plc.
Stephanie Hazell – Director, 46, was appointed to the Board as
a Non-executive Director in March 2020. Stephanie is currently
Non-executive Director at NSMP Limited, Neos Networks and Senior
Advisor to Shell Renewables and Energy Services. Stephanie has over
20 years’ relevant experience working in high profile businesses
including PricewaterhouseCoopers LLP, Orange SA, Virgin
Management Ltd and National Grid Plc where she held the
position of Director, Strategy and Corporate Development.
Louise Hardy - Director, 55, was appointed as a Non-executive
Director in December 2021. Louise is currently Non-Executive
Director of Crest Nicholson Holdings Plc, Genuit Group Plc and
Severfield Plc. A Chartered Civil Engineer, Louise brings wealth of
experience gained across a variety of roles in both the public and
private sector including European Project Excellence Director at
AECOM and Infrastructure Director at Laing O’Rourke.
Executive Directors
Andries Liebenberg – Director, 53, was appointed to the Board
on 31 March 2016. Andries was previously Managing Director of
Renew’s largest business, Amalgamated Construction Limited,
and has been with the Group over ten years.
Paul Scott – Director, 57, 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, 41, 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.
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David Forbes and Andries Liebenberg retire by rotation at the
2022 Annual General Meeting (“AGM”) and offer themselves for
reappointment. The Board recommends their reappointment as it
considers that they continue to perform their roles well and bring
considerable 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
they may sustain or incur in connection with the performance of
their 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.
Disclosable interests
As at 30 September 2021, the Company has been notified of the
following disclosable interests in the voting rights of the Company:
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 are due
for refinancing by January 2024, which is during the period being
considered. It is highly likely that the Board will be able to replace
these facilities at the appropriate time.
Number
of Ordinary
Shares
Percentage
of issued
share capital
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.
Octopus Investments Nominees
Limited
14,763,727
18.8%
Investec Wealth & Investment
Limited
Charles Stanley Group PLC
Canaccord Genuity Group Inc.
Rathbone Brothers PLC
BlackRock Asset Management
Limited
Polar Capital LLP
6,203,368
5,456,956
3,937,370
3,175,935
2,753,546
2,643,153
7.9%
6.9%
5.0%
4.0%
3.5%
3.4%
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 2021 are set out on pages 80 to 84.
No Director has any interest in any other Group company.
Details of the Directors’ remuneration and service contracts
appear on pages 80 and 81.
Share capital
As at the date of this report, the total number of shares in issue
(being Ordinary Shares of 10p each) is 78,681,334. During the year,
the Company has not bought back any of its own shares. 126,280
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.
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.
Section 172(1) Statement
As required by Section 172 of the Companies Act 2006, the
Directors confirm that, during the year, they continued to act in
such a way as to promote the success of the Company for the
benefit of all its stakeholders. Our full Section 172(1) Statement
can be read on page 19.
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
In line with the Corporate Governance Code 2018, KPMG LLP
will resign as the Group’s audit firm at the conclusion of the 2021
audit process. In preparation for this, during 2021 the Committee
undertook a process to identify a new auditor. This thorough
process was concluded successfully and the Committee proposed
to the Board that EY LLP be recommended for appointment
as the Group’s auditor at the Annual General Meeting in 2022.
The Committee would like to thank KPMG LLP for their services
to the Group.
Approval
The Board approved the Report of the Directors on 9 December 2021.
By order of the Board
Sean Wyndham-Quin
Company Secretary
9 December 2021
Company number 650447
Renew Holdings plc Annual Report and Accounts 2021
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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.
• 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.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
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 accounting standards in conformity with the
requirements of the Companies Act 2006 applicable law and they
have elected to prepare the parent Company financial statements
in accordance with UK accounting standards and applicable law,
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 the Group’s 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 international accounting
standards in conformity with the requirements of the
Companies Act 2006;
• 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
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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 2021 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 note 1.
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.
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 2021 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly prepared
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
• 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.
2 Key audit matters: our assessment of risks
of material misstatement
Key audit matters are those matters that, in our professional
judgement, 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, in decreasing order
of audit significance, were as follows.
Recognition of
revenue and profit,
and carrying value
of contract balances
Recurring risk
£147.1m of contract
balances (2020: £121.9m).
£791.0m of contract
revenue (2020: £620.3m).
Refer to page 99
(accounting policy) and
pages 104 and 114
(financial disclosures).
The risk
Our response
Subjective estimate
The Group’s activities are undertaken
via specialist engineering contracts.
The carrying value of construction
contract assets as well as revenue
and profit recognised are based on
estimates of work performed and may
also include an element 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. These uncertainties
have increased as a result of Covid-19.
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.
We performed the detailed tests below rather than seeking to rely
on any of the Group’s controls because our knowledge of the
design of these controls indicated that we would not be able to
obtain the required evidence to support reliance on controls.
Our procedures included:
• Test of detail: Identifying contracts with risk indicators, including
material contracts with low margin or loss making, material
carrying values of contract assets, significant margin movements
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 other third-party documentation,
to corroborate the position. We challenged the Group 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, including
consideration of Covid-19 related impacts;
• Test of detail: Assessed the existence of customer claims
and disputes to external correspondence and challenging
the Group’s assessment of the position taken on such higher
risk contracts;
Renew Holdings plc Annual Report and Accounts 2021
89
Independent auditor’s report continued
to the members of Renew Holdings plc
2 Key audit matters: our assessment of risks of material misstatement continued
The risk
Our response
Recognition of
revenue and profit,
and carrying value
of contract balances
continued
Valuation of
intangible assets
in relation to the
acquisition of
J Browne Group
Holdings Limited
Goodwill: £8.7m.
Intangible Assets:
£12.2m.
Refer to page 100
(accounting policy)
and page 110 (financial
disclosures).
Subjective Valuation
On 26 March 2021, the Group acquired
J Browne Group Holdings for a total
cash consideration of £41.5 million.
In accounting for the acquisition, the
Group needs to ensure all identifiable
assets are recognised at their
acquisition-date fair values.
The valuation of intangible assets
requires a significant degree of
judgement with estimates including the
trading performance of the J Browne
Group, the timing of future cashflows
and the discount rate applied.
The effect of these matters is that,
as part of our risk assessment, we
determined that valuation of intangible
assets identified in relation to the
acquisition of the J Browne Group
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.
• Historical comparisons: Assessing the reliability of the Group’s
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.
We performed the detailed tests below rather than seeking to rely
on any of the Group’s controls because our knowledge of the
design of these controls indicated that we would not be able to
obtain the required evidence to support reliance on controls.
Our procedures included:
• Our sector experience: Evaluating assumptions used,
in particular those relating to forecast revenue, EBITDA
performance, and customer attrition rates, engaging our own
valuation specialists to evaluate assumptions such as the
discount rate used;
• Methodology choice: Using our own valuation specialists to
assess the methodology used in valuing the intangible assets
recognised, such as the customer contracts intangible assets;
• Tests of detail: Corroborating management’s calculations to
supporting documentation such as Sale Purchase Agreement,
and supporting documentation relating to the balance sheet
on acquisition;
• Sensitivity analysis: We performed our own analysis to assess
the sensitivity of the valuation of intangible assets to changes
in the key assumptions, noted above; and
• Historical comparisons: Evaluating how management’s
assumptions for future performance at acquisition date
compared to actual performance, both prior to acquisition
and since.
• Assessing transparency: Assessing the adequacy of the
Group’s disclosures in respect of the identification and valuation
of acquisition related intangible assets.
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The risk
Our response
Recoverability of
parent company’s
investment in
subsidiaries
Recurring risk
£236.5m (2020: £195.0m)
of investments in
subsidiaries.
Refer to page 132
(accounting policy)
and page 135 (financial
disclosures).
Forecast-based valuation
The carrying amount of the parent
company’s investments in subsidiaries
is significant and the estimated
recoverable amount is subjective due
to the inherent uncertainty involved in
forecasting and discounting their
future cashflows.
The discounted expected future
cashflows are based on assumptions of
forecast future financial performance,
which inherently contain an element of
judgement and uncertainty.
Significant assumptions in the
forecast future financial performance
include sales growth rates, operating
margins and the discount rate applied
to future cashflows.
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
£2.0m (2020: £1.5m), determined with reference to a benchmark
of Group profit before taxation from continuing operations (2020:
normalised to exclude the charge related to acquisition costs of
Carnell Group, totalling £1.2m), of which it represents 5% (2020: 5%).
Materiality for the parent company financial statements as a whole was
set at £1.8m (2020: 1.2m), determined with reference to a benchmark of
Company net assets, of which it represents 2% (2020: 1%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial misstatements
in individual account balances add up to a material amount across
the financial statements as a whole.
Performance materiality was set at 75% (2020: 75%) of materiality
for the financial statements as a whole, which equates to £1.5m
(2020: £1.1m) for the Group and £1.3m (2020: £1.0m) for the
parent Company.
We performed the detailed tests below rather than seeking to rely
on any of the Group’s controls because our knowledge of the
design of these controls indicated that we would not be able to
obtain the required evidence to support reliance on controls.
Our procedures included:
• Tests of detail: Comparing the carrying amount of the
investments 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 cashflow 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; and
• Assessing transparency: Assessing the adequacy of the
parent company’s disclosures in respect of the investment
in subsidiaries.
We applied this percentage in our determination of performance
materiality because we did not identify any factors indicating an
elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £0.1m (2020:
£0.1m), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group’s 28 (2020: 29) reporting components, we subjected
23 (2020: 20) to full scope audits for Group purpose. These audits
covered 94% (2020: 97%) of total Group revenue, 96% (2020: 95%)
of Group profit before tax, and 92% (2020: 97%) 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 £1.76m to
£0.05m (2020: £1.20m to £0.04m).
The work on all components was performed by the Group team.
The Group team performed procedures on the items excluded
from profit before tax before continuing operations.
Renew Holdings plc Annual Report and Accounts 2021
91
Independent auditor’s report continued
to the members of Renew Holdings plc
4 Going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group’s and the Company’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”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its 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 and metrics relevant to debt covenants over
this period were:
• The ongoing availability & headroom on bank facilities in order
to meet working capital requirements.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could
arise from these risks individually and collectively against the level
of available financial resources and covenants indicated by the
Group’s financial forecasts.
Our procedures included:
• Critically assessing assumptions in the Directors’ initial
downside scenarios relevant to liquidity and covenant metrics.
We also compared past budgets to actual results to assess the
directors’ track record of budgeting accurately.
•
Inspecting the confirmation from the lender of the level of
committed financing, and the associated covenants requirements.
• Assessing the completeness of the going concern disclosure.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company’s ability to
continue as a going concern for the going concern period; and
• we found the going concern disclosure in note 1 to be acceptable.
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 above conclusions are not a guarantee that the Group
or the Company will continue in operation.
5 Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
• Enquiring of directors as to the Group’s high-level policies and
procedures to prevent and detect fraud, as well as whether they
have knowledge of any actual, suspected or alleged fraud.
• Reading Board minutes.
• Considering remuneration incentive schemes and performance
targets for management including the operating profit target
for management remuneration.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls and the
risk of fraudulent revenue recognition, in particular the risk that
revenue is recorded in the wrong period and the risk that Group
and component management may be in a position to make
inappropriate accounting entries.
Further detail in respect of recognition of revenue and profit,
and carrying value of contract balances is set out in the key
audit matter disclosures in section 2 of this report.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries and other adjustments to test
(for all full scope components subject to audit as disclosed in
section 3 of this report) based on risk criteria and comparing the
identified entries to supporting documentation. This included
those posted to unusual accounts; and
• Performing procedures over revenue recognition for all full
scope components including substantive procedures in respect
of revenue truncations either side of the balance sheet date.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the Directors (as required by auditing standards)
and discussed with the directors the policies and procedures
regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation.
92
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ability to detect continued
Identifying and responding to risks of material
misstatement due to non-compliance with laws and
regulations continued
We identified the following areas as those most likely to have such
an effect: health and safety, anti-bribery, employment law and
environmental protection legislation. Auditing standards limit
the required audit procedures to identify non-compliance
with these laws and regulations to enquiry of the Directors and
other management and inspection of regulatory and legal
correspondence, if any. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance
or fraud and cannot be expected to detect non-compliance with all
laws and regulations.
6 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.
7 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.
8 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 88,
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.
9 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
9 December 2021
Renew Holdings plc Annual Report and Accounts 2021
93
Group income statement
for the year ended 30 September
Before
exceptional
Exceptional
items and
items and amortisation
amortisation of intangible
assets
of intangible
(see Note 3)
assets
2021
2021
£000
£000
Note
Before
exceptional
items and
amortisation
of intangible
assets
2020
£000
Exceptional
items and
amortisation
of intangible
assets
(see Note 3)
2020
£000
Total
2021
£000
Revenue: Group including share of joint ventures
790,995
— 790,995
620,375
Less share of joint ventures’ revenue
(15,356)
—
(15,356)
—
Group revenue from continuing activities
2
775,639
— 775,639
620,375
Cost of sales
Gross profit
(666,454)
— (666,454)
(527,274)
109,185
— 109,185
93,101
—
—
—
—
—
Total
2020
£000
620,375
—
620,375
(527,274)
93,101
Administrative expenses
(57,985)
(10,070)
(68,055)
(53,453)
(6,741)
(60,194)
Share of post-tax result of joint ventures
15
11
—
11
(39)
—
(39)
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
51,211
(10,070)
41,141
39,609
(6,741)
32,868
19
(836)
428
—
—
—
19
44
(836)
(1,343)
428
532
50,822
(10,070)
40,752
38,842
(11,096)
2,427
(8,669)
(6,905)
—
—
—
(6,741)
1,146
44
(1,343)
532
32,101
(5,759)
39,726
(7,643)
32,083
31,937
(5,595)
26,342
(1,620)
30,463
40.79p
40.46p
38.73p
38.41p
(5,590)
20,752
34.00p
33.72p
26.78p
26.57p
94
Renew Holdings plc Annual Report and Accounts 2021
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:
Note
2021
£000
30,463
Movement in actuarial valuation of the defined benefit pension schemes
28
(25,672)
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
Group statement of changes in equity
for the year ended 30 September
At 1 October 2019
7,533
51,904
3,896
1,339
576
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
323
14,474
245
(23)
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2020
£000
20,752
(2,775)
971
(1,804)
(23)
(23)
9,026
(16,646)
(8)
(8)
13,809
18,925
Retained
earnings
£000
27,010
20,752
(5,778)
Total
equity
£000
92,258
20,752
(5,778)
14,797
245
(23)
(2,775)
(2,775)
971
971
At 30 September 2020
7,856
66,378
3,896
1,316
821
40,180
120,447
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
12
258
(8)
30,463
30,463
(10,354)
(10,354)
647
659
258
(8)
(25,672)
(25,672)
9,026
9,026
At 30 September 2021
7,868
66,378
3,896
1,308
1,079
44,290
124,819
Renew Holdings plc Annual Report and Accounts 2021
95
Group balance sheet
at 30 September
Non-current assets
Intangible assets – goodwill
– other
Property, plant and equipment
Right of use assets
Investment in joint ventures
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Assets held for resale
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total assets
Non-current liabilities
Borrowings
Lease liabilities
Retirement benefit obligation
Deferred tax liabilities
Provisions
Current liabilities
Borrowings
Trade and other payables
Lease 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
9 December 2021
96
Renew Holdings plc Annual Report and Accounts 2021
Note
2021
£000
2020
£000
10
10
11
12
15
28
7
13
14
16
18
20
21
28
7
22
20
19
21
22
24
25
25
25
25
25
139,698
29,241
16,254
17,247
5,708
661
2,301
211,110
2,078
1,250
157,416
1,382
881
163,007
374,117
—
(9,421)
(152)
(8,067)
(441)
(18,081)
124,691
23,062
14,806
17,481
—
28,059
2,164
210,263
1,619
1,500
129,838
2,174
13,396
148,527
358,790
(4,373)
(9,347)
—
(14,252)
(441)
(28,413)
(14,609)
(8,752)
(207,667)
(192,370)
(6,180)
(2,761)
(6,047)
(2,761)
(231,217)
(209,930)
(249,298)
(238,343)
124,819
120,447
7,868
66,378
3,896
1,308
1,079
44,290
124,819
7,856
66,378
3,896
1,316
821
40,180
120,447
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 ventures
Impairment and amortisation of intangible assets
Defined benefit pension scheme G.M.P. equalisation/past service deficit
Depreciation of property, plant and equipment and right of use assets
Profit on sale of property, plant and equipment
(Increase)/decrease in inventories
(Increase)/decrease in receivables
Increase in payables and provisions
Current and past service cost in respect of defined benefit pension scheme
Cash contribution to defined benefit pension schemes
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 outflow 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 lease liabilities
Net cash outflow from financing activities
Net (decrease)/increase in continuing cash and cash equivalents
Net decrease in discontinued cash and cash equivalents
Net (decrease)/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
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2020
£000
26,342
39
5,529
—
9,672
(483)
301
1,465
17,080
69
(4,817)
245
(44)
811
(1,343)
(8,179)
5,759
52,446
(592)
51,854
44
100
725
(3,756)
(40,512)
Note
15
10,15
3
11,12
3
28
28
25
5
5
7
15
2021
£000
32,083
(11)
6,463
2,805
10,504
(649)
(405)
(15,289)
3,996
61
(560)
258
(19)
408
(836)
(7,335)
8,669
40,143
(976)
39,167
19
60
1,263
(4,042)
(33,343)
(36,043)
(43,399)
8
(10,354)
659
10,000
(18,752)
(7,410)
(25,857)
(21,757)
(976)
(22,733)
13,396
(18)
(5,778)
14,797
—
(8,750)
(6,972)
(6,703)
2,344
(592)
1,752
11,667
(23)
13,396
13,396
—
13,396
Cash and cash equivalents at end of year
32
(9,355)
Bank balances and cash
Bank overdraft
Cash and cash equivalents at end of year
881
(10,236)
(9,355)
Renew Holdings plc Annual Report and Accounts 2021
97
Notes to the accounts
1 Accounting policies
Presentation of consolidated financial statements
The consolidated financial statements have been prepared in accordance with applicable law and International Accounting Standards in
conformity with the requirements of the Companies Act 2006 (“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 which commenced on 1 October 2018.
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.
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 28 to these financial statements.
c) Carrying value of intangible fixed assets
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.
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.
d) Provisions
Provisions are made where the outcome of a legal or contractual liability cannot be assessed with a high degree of certainty. A liability is
only recognised where, based on the Group’s view or legal advice, it is considered probable that an outflow of resource will be required
to settle a present obligation that can be measured reliably.
(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 which
consider the Group’s future development, performance and its financial position, including cash flows, liquidity position and borrowing
facilities, as well as the risks and uncertainties relating to the Group’s business activities. The budgets cover a three year period.
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(i) Basis of accounting and preparation continued
The following factors were considered relevant:
• the current order book and pipeline of potential future framework orders;
• the Group’s liquidity and its bank facilities which are committed until January 2024, including both the level of those facilities and the
covenants attached to them; and
• the continued potential impact of Covid-19 on the Group’s profit and cashflows.
The Board has reviewed the principal risks and uncertainties affecting the Group in the context of the Covid-19 pandemic. The Board
recognises that the impact of Covid-19 is being felt across all aspects of the Group’s operations and that the overall risk environment
has increased as a result of the pandemic. Despite this, the Board considers that it has taken additional actions to address those risks
specifically arising from Covid-19. In this context the directors have modelled a base-case and a severe but plausible scenario. However,
even with a severe downturn, with a strong balance sheet the directors are confident that the Group has sufficient cash and committed
funding in place to meet its obligations for a period of at least 12 months from the approval of the financial statements. Consequently,
the directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going
concern basis.
The consolidated financial statements have been prepared in accordance with applicable law and International Accounting Standards
in conformity with the requirements of the Companies Act 2006 (“Adopted IFRSs”). 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.
Adopted IFRSs effective in the year:
The standards and interpretations that are applicable for the first time in the Group’s financial statements for the year ended
30 September 2021 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 a construction contracts.
The Engineering segment encompasses businesses in the rail, environmental, infrastructure and energy 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 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.
Renew Holdings plc Annual Report and Accounts 2021
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Notes to the accounts continued
1 Accounting policies continued
(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 contract costs incurred to date as a proportion of estimated total
contract costs. 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 consideration
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 is 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.
(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
Right of use assets are depreciated from the commencement date to the earlier of the end of the useful life of the right of use asset
or the end of the lease term.
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(viii) Impairments
Goodwill arising on acquisitions and other assets that have an indefinite useful life and are therefore not subject to amortisation, are
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 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 comprise 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 accounting policy
The Group has relied upon the exemption under IFRS 16 to exclude the impact of low-value leases and leases that are short-term in
nature (defined as leases with a term of 12 months or less). Costs on those leases are recognised on a straight-line basis as an operating
expense within the income statement. All other leases are accounted for in accordance with this policy.
The Group has various lease arrangements for properties (e.g. office buildings and storage facilities), vehicles, and other equipment
including plant and machinery. At the inception of a lease contract, the Group assesses whether the contract conveys the right to
control the use of an identified asset for a certain period of time and whether it obtains substantially all the economic benefits from
the use of that asset, in exchange for consideration. The Group recognises a lease liability and a corresponding right of use asset with
respect to all such lease arrangements in which it is a lessee.
A right of use asset is capitalised on the balance sheet at cost which comprises the present value of future lease payments determined
at the inception of the lease adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred in addition to an estimate of costs to remove or restore the underlying asset. Where a lease incentive is receivable, the amount
is offset against the right of use asset at inception. Right of use assets are depreciated using the straight-line method over the shorter of
the estimated useful life of the asset or the lease term and are assessed in accordance with IAS 36 “Impairment to Assets” to determine
whether the asset is impaired and to account for any loss. The lease liability is initially measured at the present value of lease payments
as outlined above and is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. Lease
payments comprise fixed lease rental payments. Lease liabilities are classified between current and non-current on the balance sheet.
Since the discount rate implicit in the leases could not be readily determined, the key estimate applied by management relates to the
assessment of the incremental borrowing rate adopted by the Group to discount the future lease rentals to present value in order to
measure the lease liabilities. The weighted average rate applied by the Group at transition was 3.0%.
If an underlying asset is re-leased by the Group to a third party and the Group retains the primary obligation under the original lease, the
transaction is deemed to be a sub-lease. The Group continues to account for the original lease (the head lease) as a lessee and accounts
for the sublease as a lessor (intermediate lessor). When the head lease is a short-term lease, the sublease is classified as an operating
lease. Otherwise, the sublease is classified using the classification criteria applicable to Lessor Accounting in IFRS 16 by reference to the
right of use asset in the head lease (and not the underlying asset of the head lease). After classification lessor accounting is applied to
the sublease.
Renew Holdings plc Annual Report and Accounts 2021
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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. Movement 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.
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(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.
(xxvii) Government grants
Government grant income is recognised at the point that there is reasonable assurance that the Group will comply with the conditions
attached to it, and that the grant will be received. During last year, Coronavirus Job Retention Scheme (“CJRS”) income was received
and offset against cost of sales or administrative expenses depending on where the employee costs were recorded.
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 43.0% (2020: 47.0%) 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 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 during the financial year ended 30 September 2018, the Board decided to close Lovell America Inc, which was
completed in the previous financial year. The results of these businesses are shown as discontinued operations.
Renew Holdings plc Annual Report and Accounts 2021
103
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
ventures
2021
£000
Less share
of joint
ventures
2021
£000
Group revenue
from continuing
activities
2021
£000
Group revenue
from continuing
activities
2020
£000
706,682
(15,356)
691,326
84,425
(2,250)
—
—
84,425
(2,250)
788,857
(15,356)
773,501
2,138
—
2,138
790,995
(15,356)
775,639
577,238
43,207
(2,025)
618,420
1,955
620,375
Analysis of profit on ordinary activities before taxation from continuing activities
Before
exceptional
items and
amortisation
of intangible
assets
2021
£000
51,526
1,613
53,139
(1,928)
51,211
(389)
Exceptional
items and
amortisation
of intangible
assets
2021
£000
2021
£000
(9,070)
42,456
—
1,613
(9,070)
(1,000)
(10,070)
—
44,069
(2,928)
41,141
(389)
Before
exceptional
items and
amortisation
of intangible
assets
2020
£000
40,754
1,014
41,768
(2,159)
39,609
(767)
Exceptional
items and
amortisation
of intangible
assets
2020
£000
(6,741)
—
(6,741)
—
(6,741)
—
2020
£000
34,013
1,014
35,027
(2,159)
32,868
(767)
50,822
(10,070)
40,752
38,842
(6,741)
32,101
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
2021
Liabilities
£000
Net assets
£000
Assets
£000
2020
Liabilities
£000
300,665
(195,758)
104,907
282,885
(206,020)
72,971
(65,313)
204,500
(174,650)
2,276
(19,872)
7,658
29,850
(17,596)
63,306
217,860
3,348
(57,069)
(165,132)
(18,731)
(206,295)
206,295
—
(208,609)
208,609
Net assets
£000
76,865
6,237
52,728
(15,383)
—
374,117
(249,298)
124,819
358,790
(238,343)
120,447
2021
2020
Capital
additions
£000
9,919
110
1,233
Depreciation
£000
Amortisation
£000
8,546
197
1,761
6,463
—
—
11,262
10,504
6,463
Capital
additions
£000
8,878
24
1,460
10,362
Depreciation
£000
Amortisation
£000
7,610
225
1,837
9,672
5,529
—
—
5,529
(b) Geographical analysis
Group 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.
104
Renew Holdings plc Annual Report and Accounts 2021
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 as leases
Rental income
CJRS government grants
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 assurance services
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
2020
£000
610
11
3,769
5,903
(197)
(4,751)
(483)
2020
£000
194
416
9
2
621
2021
£000
893
—
4,392
6,112
(172)
—
(649)
2021
£000
281
612
—
—
893
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 were 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
Amco defined benefit scheme past service cost deficit
Acquisition costs
Total losses arising from exceptional items
Amortisation of intangible assets (see Note 10 and Note 15)
Total exceptional items and amortisation charge before income tax
Taxation credit on exceptional items and amortisation
Total exceptional items and amortisation charge
2021
£000
1,107
1,698
802
3,607
6,463
10,070
(2,427)
7,643
2020
£000
—
—
1,212
1,212
5,529
6,741
(1,146)
5,595
As referred to in last year’s Annual Report as a post balance sheet event, on 20 November 2020 the High Court handed down a further
judgement in the Lloyds Bank case regarding equalising guaranteed minimum pension benefits. The judge found that pension schemes
do have a liability to pay top-ups to members who transferred out in the past. The effect of this for the schemes has been estimated by
the actuaries as an additional liability of £1,107,000.
The Amco defined benefit scheme recognised an actuarial estimate of £1,698,000 additional liabilities from extending the Barber
window to be in line with recent legal advice received by the Trustee as part of a potential “buy-in” transaction to remove the scheme’s
investment and funding risk. This legal advice indicates that the scheme may not have equalised normal pension age (NPA) as previously
assumed in the early 1990’s, and that the NPA for members in service in May 1991 may be 60 for a higher proportion of their service.
Acquisition costs relate to the acquisitions of J Browne Group Holdings Ltd and Rail Electrification Ltd on 26 March 2021 and
28 May 2021 respectively.
The Board has separately identified the charge of £6,463,000 (2020: £5,529,000) for the amortisation of the fair value ascribed to
certain intangible assets, other than goodwill, arising from the acquisitions of Giffen Holdings Ltd, QTS Group Ltd, Carnell Group
Holdings Ltd, J Browne Group Holdings Ltd and Rail Electrification Ltd. Further details are given in Note 10 and Note 15.
Renew Holdings plc Annual Report and Accounts 2021
105
Notes to the accounts continued
4 Loss for the year from discontinued operations
Revenue
Expenses
Loss before income tax
Income tax charge
2021
£000
—
(1,620)
(1,620)
—
2020
£000
—
(5,590)
(5,590)
—
Loss for the year from discontinued operations
(1,620)
(5,590)
During the previous year the Group completed the closure of Lovell America Inc having incurred £271,000 additional costs in finalising
historical taxation issues. Once any surplus cash has been repatriated, the Group will no longer have any overseas exposure.
On 31 October 2014, the Board reached an agreement to sell Allenbuild Ltd to Places for People Group Ltd. As a term of the disposal
Renew Holdings plc retained both the benefits and the obligations associated with a number of Allenbuild contracts which resulted in
the requirement for an additional £1,620,000 (2020: £5,319,000) accrual. This was as a result of the settlement of historic claims during
the financial year and a subsequent internal reassessment of the likely costs required to settle other known contractual disputes.
5 Finance income and costs
Finance income
Finance income of £19,000 (2020: £44,000) 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 28 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
2021
£000
(225)
(611)
(836)
3,204
(2,776)
428
2021
Number
3,630
3,696
2,247
1,449
3,696
2021
£000
169,134
18,293
8,274
258
2020
£000
(871)
(472)
(1,343)
3,961
(3,429)
532
2020
Number
3,292
3,338
2,088
1,204
3,292
2020
£000
140,612
15,381
6,932
245
195,959
163,170
106
Renew Holdings plc Annual Report and Accounts 2021
S
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R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
6 Employee numbers and remuneration continued
Directors’ emoluments
Aggregate emoluments
Highest paid director: aggregate emoluments
Executive Directors
P Scott
A P Liebenberg
S C Wyndham-Quin
Non-executive Directors
D M Forbes
D A Brown
S D Dasani
S A Hazell
Salary/fees
£000
Bonuses
£000
314
225
240
78
47
47
47
359
261
274
—
—
—
—
LTIP
£000
274
204
204
—
—
—
—
2021
£000
2,746
1,010
2020
£000
2,102
833
Total
emoluments
2021
£000
Total
emoluments
2020
£000
Benefits
£000
63
55
54
—
—
—
—
1,010
745
772
2,527
78
47
47
47
833
609
474
1,916
75
44
44
25
2,746
2,104
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 P Liebenberg
S C Wyndham-Quin
Exercisable
between
4 Dec 2021
& 3 Dec 2028
Exercisable
between
18 Feb 2023
& 17 Feb 2030
Exercisable
between
15 Dec 2023
& 14 Dec 2030
129,310
92,833
96,983
118,269
84,907
88,702
89,785
65,267
68,702
During the year £258,000 (2020: £245,000) was charged to the income statement with a corresponding 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
2021
£000
(8,719)
25
(8,694)
601
(576)
25
(8,669)
2020
£000
(5,732)
216
(5,516)
(1,848)
1,605
(243)
(5,759)
Renew Holdings plc Annual Report and Accounts 2021
107
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% (2020: 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
2021
£000
40,752
(7,743)
(837)
1,476
(1,590)
25
2020
£000
32,101
(6,099)
(297)
433
(12)
216
(8,669)
(5,759)
Deferred tax has been provided at a rate of 25% (2020: 19%) following the decision that the UK corporation tax rate should increase to
25% (effective from 1 April 2023 and substantively enacted on 24 May 2021). The deferred tax asset and liability at 30 September 2021
has been calculated based on these rates, reflecting the expected timing of reversal of the related temporary timing differences (2020:
19%). The Group has available further unused UK tax losses of £25.3m (2020: £29.3m) 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 £5.2m (2020: £4.0m).
(c) Deferred tax asset
Defined benefit pension scheme
Accelerated capital allowances
Other timing differences
Future tax losses
(d) Deferred tax liabilities
Defined benefit pension scheme
Accelerated capital allowances
Fair value adjustments
(e) Reconciliation of deferred tax asset
As at 1 October
Origination of timing differences
Change of deferred tax rate
Reclassification of opening accelerated capital allowances as a liability
Reclassification of opening pension scheme asset as a liability
Defined benefit pension schemes – income statement
Defined benefit pension schemes – SOCI
At 30 September
108
Renew Holdings plc Annual Report and Accounts 2021
2021
£000
38
—
1,170
1,093
2,301
2021
£000
(231)
(52)
(7,784)
(8,067)
2021
£000
2,164
331
457
(689)
(253)
394
(103)
2020
£000
—
689
241
1,234
2,164
2020
£000
(9,821)
—
(4,431)
(14,252)
2020
£000
1,416
582
166
—
—
—
—
2,301
2,164
7 Income tax expense continued
(f) Reconciliation of deferred tax liability
As at 1 October
Acquisition of subsidiary undertaking
Arising on fair value adjustments
Change of deferred tax rate
Reclassification of opening accelerated capital allowances as a liability
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 2021)
Final (related to the year ended 30 September 2020)
Total dividend paid
Interim (related to the year ended 30 September 2021)
Final (related to the year ended 30 September 2020)
Total dividend paid
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
2021
£000
(14,252)
(2,754)
675
(2,016)
689
253
207
9,131
(8,067)
2020
£000
(10,598)
(3,634)
1,051
(194)
—
—
(1,848)
971
(14,252)
2021
Pence/share
2020
Pence/share
4.83
8.33
13.16
£000
3,800
6,554
10,354
—
7.67
7.67
£000
—
5,778
5,778
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 11.17p per Ordinary Share be paid in respect of the year ended 30 September 2021.
This will be accounted for in the 2021/22 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
Earnings
£000
39,726
(7,643)
2021
EPS
Pence
50.51
(9.72)
DEPS
Pence
50.09
(9.63)
Earnings
£000
31,937
(5,595)
2020
EPS
Pence
41.22
(7.22)
DEPS
Pence
40.89
(7.17)
32,083
40.79
40.46
26,342
34.00
33.72
Weighted average number of shares
78,655
79,304
(1,620)
30,463
(2.06)
38.73
(2.05)
38.41
(5,590)
20,752
(7.22)
26.78
77,480
(7.15)
26.57
78,114
The dilutive effect of share options is to increase the number of shares by 649,000 (2020: 634,000) and reduce basic earnings per
share by 0.32p (2020: 0.21p).
Renew Holdings plc Annual Report and Accounts 2021
109
Notes to the accounts continued
10 Intangible assets
Cost:
At 1 October 2019
Addition
At 1 October 2020
Additions
At 30 September 2021
Impairment losses/amortisation:
At 1 October 2019
Charge for year
At 1 October 2020
Charge for year
At 30 September 2021
Carrying amount:
At 30 September 2021
At 30 September 2020
At 30 September 2019
The carrying amounts of goodwill allocated to cash generating units (“CGUs”) are as follows:
Britannia Construction Ltd
V.H.E. Construction PLC
Seymour (C.E.C.) Holdings Ltd and its subsidiary
Shepley Engineers Ltd and its subsidiaries
Amco Group Holdings Ltd and its subsidiaries
Lewis Civil Engineering Ltd and its subsidiaries
Clarke Telecom Ltd
QTS Group Ltd and its subsidiaries
Carnell Group Holdings Ltd
J Browne Group Holdings Ltd and its subsidiaries
Contractual
rights and
customer
relationships
£000
30,976
19,128
50,104
12,508
Goodwill
£000
105,282
19,409
124,691
15,007
139,698
62,612
—
—
—
—
—
139,698
124,691
105,282
2021
£000
1,253
1,796
4,017
633
25,691
6,556
11,143
57,800
19,409
11,400
21,513
5,529
27,042
6,329
33,371
29,241
23,062
9,463
2020
£000
1,253
1,796
4,017
633
25,691
6,556
11,143
54,193
19,409
—
139,698
124,691
J Browne Group Holdings Ltd and its subsidiaries
Goodwill of £11,400,000 arises on acquisition and will be reviewed for impairment one year after the acquisition and then on an ongoing
basis as required by IFRS 3. Other intangible assets provisionally valued at £12,236,000, 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 will commence from April 2021.
Rail Electrification Ltd
Goodwill of £3,607,000 arises on acquisition and will be reviewed for impairment one year after the acquisition and then on an ongoing
basis as required by IFRS 3. Other intangible assets provisionally valued at £272,000, 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 will commence from June 2021.
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 thirteen years.
110
Renew Holdings plc Annual Report and Accounts 2021
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
10 Intangible assets continued
Rail Electrification Ltd continued
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 2-5% (2020: 1-5%) per annum has been used. The range of discount rates used within each
CGU is 10.0%-12% (2020: 10.0%-12%). The Board considers the rates appropriate as, based on publicly available information, they
represent 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. The
valuation of the cash generating units indicates sufficient headroom such that any reasonably possible change to key assumptions
is unlikely to result in an impairment in related goodwill.
11 Property, plant and equipment
Cost:
At 1 October 2019
Additions
Disposals
Transfer to right of use assets
Transfer from right of use assets
Acquisition of subsidiary
At 1 October 2020
Additions
Disposals
Transfer from right of use assets
Acquisition of subsidiary
At 30 September 2021
Depreciation:
At 1 October 2019
Charge for year
Disposals
Transfer to right of use assets
Transfer from right of use assets
At 1 October 2020
Charge for year
Disposals
Transfer from right of use assets
At 30 September 2021
Net book value:
At 30 September 2021
At 30 September 2020
At 30 September 2019
Freehold
land and buildings
£000
Long leasehold
land and buildings
£000
Plant, vehicles
and equipment
£000
6,057
78
—
—
—
—
6,135
446
—
—
—
—
—
—
—
—
411
411
—
—
—
—
42,144
3,932
(3,373)
(10,965)
964
494
33,196
3,596
(4,182)
2,650
573
Total
£000
48,201
4,010
(3,373)
(10,965)
964
905
39,742
4,042
(4,182)
2,650
573
6,581
411
35,833
42,825
484
212
—
—
—
696
293
—
—
989
5,592
5,439
5,573
—
70
—
—
—
70
135
—
—
205
206
341
—
26,785
3,487
(3,169)
(3,598)
665
24,170
3,964
(3,935)
1,178
27,269
3,769
(3,169)
(3,598)
665
24,936
4,392
(3,935)
1,178
25,377
26,571
10,456
9,026
15,359
16,254
14,806
20,932
Renew Holdings plc Annual Report and Accounts 2021
111
Notes to the accounts continued
12 Right of use assets
Cost:
At 1 October 2019
Transition to IFRS 16
Additions
Disposals
Transfer from Property, plant and equipment
Transfer to Property, plant and equipment
At 1 October 2020
Additions
Disposals
Transfer to Property, plant and equipment
Acquisition of subsidiary
At 30 September 2021
Depreciation:
At 1 October 2019
Charge for year
Disposals
Transfer from Property, plant and equipment
Transfer to Property, plant and equipment
At 1 October 2020
Charge for year
Disposals
Transfer to Property, plant and equipment
At 30 September 2021
Net book value:
At 30 September 2021
At 30 September 2020
At 30 September 2019
13 Inventories
Raw materials
All inventories are pledged as security for liabilities.
14 Assets held for resale
Property
Freehold
land and buildings
£000
Long leasehold
land and buildings
£000
Plant, vehicles
and equipment
£000
—
6,311
1,874
—
—
—
8,185
2,340
—
—
289
10,814
—
1,947
—
—
—
1,947
1,991
—
—
3,938
6,876
6,238
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
£000
—
10,001
6,352
(1,107)
10,965
(964)
25,247
7,220
(402)
(2,650)
498
—
3,690
4,478
(1,107)
10,965
(964)
17,062
4,880
(402)
(2,650)
209
19,099
29,913
—
3,956
(1,070)
3,598
(665)
5,819
4,121
(34)
(1,178)
—
5,903
(1,070)
3,598
(665)
7,766
6,112
(34)
(1,178)
8,728
12,666
10,371
11,243
—
2021
£000
2,078
17,247
17,481
—
2020
£000
1,619
2021
£000
1,250
2020
£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.
112
Renew Holdings plc Annual Report and Accounts 2021
15 Investment in joint ventures
a) Movement in year
At 1 October 2019
Dividend received
Equity accounted share of net loss
At 1 October 2020
On acquisition of JBC (see Note 33)
Amortisation
Dividend received
Equity accounted share of net profit
At 30 September 2021
Goodwill
£000
—
Other intangible
asset
£000
—
—
3,812
—
1,820
(134)
3,812
1,686
b) Summarised financial information related to equity accounted joint ventures
Non-current assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total assets
Non-current liabilities
Lease liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Total liabilities
Net assets reported by equity accounted joint ventures (100%)
Revenue (100%)
Expenses (100%)
Net profit/(loss) after tax (100%)
c) Results of equity accounted joint ventures (50%)
Group share of profit/(loss) before tax
Group share of tax
Group share of profit/(loss) after tax
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
TOTAL
£000
139
(100)
(39)
—
5,891
(134)
(60)
11
5,708
2020
£000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(112)
(112)
2020
£000
(46)
7
(39)
Reserves
£000
139
(100)
(39)
—
259
(60)
11
210
2021
£000
1,296
233
12,207
110
6,200
18,750
20,046
(1,094)
(1,094)
(18,516)
(16)
(18,532)
(19,626)
420
30,712
(30,690)
22
2021
£000
14
(3)
11
Renew Holdings plc Annual Report and Accounts 2021
113
Notes to the accounts continued
15 Investment in joint ventures continued
c) Results of equity accounted joint ventures (50%) continued
The Group, through a subsidiary undertaking, has the following interest in the joint ventures:
Blackwater Plant Hire Ltd
Cappagh Brown Utilities Ltd
Enisca Browne Ltd
The joint ventures were acquired as part of the acquisition of J Browne Holdings Ltd.
Country of
incorporation
Principal
activity
Percentage of
shares held
England and Wales
Engineering
England and Wales
Engineering
Northern Ireland
Engineering
50%
50%
50%
16 Trade and other receivables
Trade receivables
Contract assets
Other receivables
Prepayments and accrued income
2021
£000
57,839
89,335
359
9,883
2020
£000
53,244
68,819
2,152
5,623
157,416
129,838
The Directors consider that the carrying amount of trade, contract assets and other receivables approximates to their fair value.
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 £3.2m (2020: £4.9m) 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. £1.0m (2020: £2.1m) of these balances relate to certified retentions. The average age of
these receivables is 361 days (2020: 358 days).
Ageing of past due but not impaired receivables:
30-180 days
180-365 days
Greater than 1 year
17 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
2021
£000
679
449
2,034
3,162
2020
£000
864
1,112
2,919
4,895
2021
£000
2020
£000
57,776
89,335
(11,614)
53,169
68,819
(6,092)
135,497
115,896
3,804,062
3,585,693
(3,668,565)
(3,469,797)
135,497
115,896
At 30 September 2021 retentions held by customers amounted to £14.2m (2020: £10.3m). Advances received from customers for
contract work amounted to £11.6m (2020: £6.1m).
Amounts due from construction contract customers which are past due at the reporting date amounted to £3.2m (2020: £4.9m).
This amount includes retention balances of £1.0m (2020: £2.1m). The Group does not hold any collateral over these balances or other
trade and other receivables.
Contract revenue recognised in the year amounted to £790.1m (2020: £620.4m).
114
Renew Holdings plc Annual Report and Accounts 2021
18 Cash and cash equivalents
Cash at bank
Cash in hand
19 Trade and other payables
Contract liabilities
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
20 Borrowings
Bank overdraft and loans repayable:
Within one year
Within two to five years
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
2021
£000
869
12
881
2021
£000
11,614
49,398
22,926
5,906
117,823
207,667
2021
£000
14,609
—
14,609
2020
£000
13,388
8
13,396
2020
£000
6,092
44,170
30,695
6,092
105,321
192,370
2020
£000
8,752
4,373
13,125
The QTS acquisition was partially funded by a £35m loan from HSBC; £4.4m (2020: £13.1m) of loan instalments remain which will be cleared
by 31 March 2022. The bank loans are secured by a fixed and floating charge over the Group’s UK assets. The Group has committed debt
facilities of £44.2m in the form of a revolving credit facility with HSBC UK Bank plc and National Westminster Bank plc which is committed
until January 2024. In addition, the Group has a further £10.0m overdraft also with HSBC which is renewed annually in January.
21 Lease liabilities
Amounts payable under 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
2021
£000
2020
£000
2021
£000
2020
£000
6,426
9,727
16,153
(552)
15,601
6,426
9,727
16,153
(759)
15,394
6,180
9,421
15,601
—
15,601
(6,180)
9,421
6,047
9,347
15,394
—
15,394
(6,047)
9,347
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
(2020: 3 years). For the year ended 30 September 2021, the average effective borrowing rate was c.3% (2020: c.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.
Following the adoption of IFRS 16 “Leases” from 1 October 2019 lease liabilities include both finance lease liabilities together with liabilities
associated with Right of use assets. The present value of minimum lease payments can be split:
Within one year
Within two to five years
Finance lease
£000
Right of use
£000
2,529
2,160
4,689
3,651
7,261
10,912
Total
2021
£000
6,180
9,421
Total
2020
£000
6,047
9,347
15,601
15,394
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.
Renew Holdings plc Annual Report and Accounts 2021
115
Notes to the accounts continued
22 Provisions
At 1 October 2020
Movement in provision during the year
At 30 September 2021
Non-current liabilities
Current liabilities
At 30 September 2021
Property
obligations
£000
452
—
452
441
11
452
Other
provisions
£000
2,750
—
2,750
—
2,750
2,750
Total
£000
3,202
—
3,202
441
2,761
3,202
Property obligations represent commitments on leases for properties where the Group expects outflows to occur at the end of the lease.
Other provisions are in respect of various contractual or legal disputes, the outcome of which cannot be assessed with a high degree of
certainty. A liability is only recognised where, based on the Group’s view or legal advice, it is considered probable that an outflow of
resource will be required to settle a present obligation that can be measured reliably.
23 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
2021
Assets
Sterling
Dollar
Liabilities
Sterling
2020
Assets
Sterling
Dollar
Liabilities
Sterling
Financial assets/(liabilities)
Fixed rate
interest rate
%
Fixed
rate
£000
Floating
rate
£000
—
—
—
—
—
438
431
869
Total
£000
438
431
869
3.0
(15,601)
(14,609)
(30,210)
(15,601)
(14,609)
(30,210)
Fixed rate
interest rate
%
Financial assets/(liabilities)
Fixed
rate
£000
Floating
rate
£000
—
—
3.0
—
—
—
(15,394)
(15,394)
12,949
439
13,388
(13,125)
(13,125)
Total
£000
12,949
439
13,388
(28,519)
(28,519)
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 21. The fixed rate liabilities have a weighted average period of
3 years (2020: 3 years).
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.
116
Renew Holdings plc Annual Report and Accounts 2021
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
23 Other financial instruments continued
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 16. 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 24 and
reserves as disclosed in Note 25. 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 20
and 21 and the retirement benefit obligations disclosed in Note 28.
An analysis of the maturity profile for finance lease liabilities is given in Note 21.
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 £Nil (2020: £230,000). The foreign exchange charge
to finance costs amounted to £Nil (2020: £Nil). Exchange rate movements on translation of Lovell America, Inc’s net assets are charged
to the cumulative translation adjustment within total equity. The exchange loss arising on the translation of Lovell America Inc’s net
assets was £8,000. The total equity statement would be impacted by £2,000 for each $0.01 movement in exchange rates.
All functional currencies of the Group operations are denominated in sterling, with the exception of the U.S. subsidiary’s bank account
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.
24 Share capital
Allotted, called up and fully paid:
2021
£000
2020
£000
78,681,334 (2020: 78,555,054) Ordinary Shares of 10p each
7,868
7,856
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 15 December 2020 126,280 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 2021, there were 860,857 options outstanding under the scheme. On 4 December 2020, options to subscribe for
a further 242,161 Ordinary Shares were granted. During the year 126,280 options were exercised and 119,720 did not vest. No options
lapsed during the year.
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.
Renew Holdings plc Annual Report and Accounts 2021
117
Notes to the accounts continued
24 Share capital continued
Share options continued
Renew Holdings plc Long Term Incentive Plan continued
Vesting of one half of the options is dependent on absolute growth in the Company’s Total Shareholder Return (’TSR’), and the other
half is 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. 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.
25 Reserves
At 1 October 2019
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
51,904
Capital
redemption
reserve
£000
3,896
Cumulative
translation
reserve
£000
1,339
Share based
payments
reserve
£000
576
14,474
245
(23)
At 1 October 2020
66,378
3,896
1,316
821
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
258
(8)
Retained
earnings
£000
27,010
20,752
(5,778)
(2,775)
971
40,180
30,463
(10,354)
647
(25,672)
9,026
At 30 September 2021
66,378
3,896
1,308
1,079
44,290
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., the Group’s
discontinued U.S. subsidiary.
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.
£258,000 (2020: £245,000) has been charged to administrative expenses in accordance with IFRS 2. There is no impact on net assets
since an equivalent amount has been credited to the share based payments reserve. 126,280 options were exercised and 119,720
options did not vest 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.
118
Renew Holdings plc Annual Report and Accounts 2021
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
25 Reserves continued
Share based payments reserve continued
Renew Holdings plc Long Term Incentive Plan continued
Options granted under the Renew Holdings plc Long Term Incentive Plan over the Company’s Ordinary Shares at 30 September 2021
were as follows:
Date of grant
3 December 2018
20 February 2020
4 December 2020
Total
Awards outstanding at 30 September 2021
– Directors and employees
Exercise price
Price at date of grant
Maximum option life
319,126
10.0p
350.00p
10 years
299,570
10.0p
548.00p
10 years
242,161
10.0p
522.00p
10 years
860,857
Assumed option life for purposes of valuation
2.83 years
2.61 years
2.79 years
Expected volatility
Risk free interest rate
Value per option
28%
0.75%
226.0p
27%
0.46%
519.0p
38%
(0.09)%
495.0p
26 Capital and leasing commitments
With regard to the leases held by the Group as lessor, the Group recognised £172,000 (2020: £197,000) of rental income in the income
statement for 2021, 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
2021
£000
172
67
239
2020
£000
184
110
294
The Group had capital commitments at 30 September 2021 of £3,953,000 (2020: £443,000).
27 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).
The Company has given guarantees and entered into counter-indemnities in respect of bonds relating to certain of the Group’s own
contracts. The Company has also given guarantees in respect of certain contractual obligations of its subsidiaries. Performance
guarantees are treated as a contingent liability until such time as it becomes probable that payment will be required under its terms.
28 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 2021 shows a surplus of £661,000 based on the assumptions set out below. The Amco scheme
shows a deficit of £(152,000) 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 the Lovell scheme as, having reviewed the rules of the scheme, they are of the view that the employer has an unconditional
right to that surplus.
Renew Holdings plc Annual Report and Accounts 2021
119
Notes to the accounts continued
28 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 2021 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
RPI 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
RPI increases to pensions in payment
Discount rate
Inflation assumption (CPI)
Inflation assumption (RPI)
Increases in deferred pensions
As at
30 September
2021
As at
30 September
2020
As at
30 September
2019
4.0%
4.3%
2.0%
2.7%
3.5%
3.4%
3.0%
3.5%
1.9%
3.0%
3.7%
3.0%
4.0%
4.2%
1.5%
2.1%
2.9%
2.9%
2.2%
2.9%
1.5%
2.2%
2.9%
2.2%
4.0%
4.2%
1.9%
2.1%
3.2%
3.1%
2.1%
3.0%
1.8%
2.1%
3.1%
2.1%
The mortality tables adopted for the valuation of the Lovell scheme are the 95% S2NA tables with future improvements in line with the Continuing
Mortality Investigations 2020 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 22.5 years and the further life expectancy of a male aged 65 in 2040 is 23.8 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 2020 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 22.1 years and the further life expectancy of a male aged 65 in 2040 is 23.4 years.
The assets in the Lovell scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2021
£000
158,685
880
3,362
Current
allocation
97%
1%
2%
Value as at
30 September
2020
£000
87,497
114,039
2,149
Value as at
30 September
2019
£000
89,317
106,775
666
Current
allocation
43%
56%
1%
162,927
100%
203,685
100%
196,758
Current
allocation
45%
54%
1%
100%
The Trustees of the Lovell Pension Scheme purchased a bulk annuity from Rothesay life in November 2020 to de-risk the defined benefit
scheme obligation. This covers all remaining insured scheme benefits following previous bulk annuity transactions in 2011 and 2016.
The Company took the decision to fund the buy-in based on the following considerations:
• a buy-in will remove volatility of the scheme from the balance sheet of the Company, and no further contributions would be expected; and
• the buy-in will transfer the pension risk associated with the scheme to a third party insurer. The only risk remaining will be the
counterparty risk of the insurer.
The difference between the annuity purchase price and the defined benefit obligation covered by the policy has been accounted for
in other comprehensive income. The accounting treatment is based on the following considerations made by the Company:
• the employer is not relieved of primary responsibility for the obligation. The policy simply covers the benefit payments that continue
to be payable by the scheme;
• the contract is effectively an investment of the scheme; and
• the contract provides the option to convert the annuity into individual policies which would transfer the obligation to the insurer
(known as a “buy-out”). Whilst this course of action may be considered in future, this is not a requirement and a separate decision
will be required before any buy-out proceeds. There are currently no plans either by management or Trustees to convert the buy-in
contract to individual policies.
120
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28 Employee benefits: Retirement benefit obligations continued
IAS 19 “Employee Benefits” continued
The assets in the Amco scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2021
£000
6,198
8,426
641
Current
allocation
41%
55%
4%
15,265
100%
Value as at
30 September
2020
£000
6,738
8,052
317
15,107
Value as at
30 September
2019
£000
6,685
8,329
213
15,227
Current
allocation
45%
53%
2%
100%
Current
allocation
44%
55%
1%
100%
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. On 26 November 2020, 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” where the annuity policy remains an asset of the scheme. Following the conclusion of the buy-in, all the scheme’s liabilities
are now matched within the annuities which has removed the scheme’s investment and funding risk. Consequently, there has been
a reduction in the IAS 19 Retirement Benefit assets in the Group’s accounts for the year ended 30 September 2021. The next triennial
valuation is due as at 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
£2.0m. 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 2019. The scheme showed a deficit
of £0.8m compared to £3.4m when measured as at 31 December 2016. 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 March 2026. 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-in of all pension liabilities.
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 the Lovell scheme. 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 plan’s
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 does 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 which is set a target return against which the trustees
monitor its 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 which is set a target return against which
the trustees monitor its performance on a regular basis.
Renew Holdings plc Annual Report and Accounts 2021
121
Notes to the accounts continued
28 Employee benefits: Retirement benefit obligations continued
IAS 19 “Employee Benefits” continued
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.
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
Guaranteed minimum payment equalisation*
Actuarial movement due to experience on benefit obligation
Actuarial movement due to changes in financial assumptions
Actuarial movement due to changes in demographic assumptions
2021
£000
2020
£000
203,685
196,758
2,978
56
(8,930)
—
(34,862)
162,927
176,348
2,565
61
—
(8,930)
1,000
(237)
(10,217)
1,676
3,703
4,313
(8,401)
(13)
7,325
203,685
172,685
3,201
56
—
(8,401)
—
(596)
8,388
1,015
Total fair value of scheme obligations carried forward
162,266
176,348
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
Guaranteed minimum payment equalisation*
Net pension interest
Actuarial movement
Net scheme surplus carried forward
122
Renew Holdings plc Annual Report and Accounts 2021
661
(231)
430
(61)
—
(61)
2,978
(2,565)
413
(34,862)
8,778
(26,084)
27,337
(9,568)
17,769
(56)
(13)
(69)
3,703
(3,201)
502
7,325
(8,807)
(1,482)
27,337
24,073
(61)
—
56
(1,000)
413
(26,084)
661
(56)
(13)
4,313
—
502
(1,482)
27,337
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28 Employee benefits: Retirement benefit obligations continued
IAS 19 “Employee Benefits” continued
Lovell Pension Scheme continued
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 arose in relation to many other defined benefit pension schemes.
* On 20 November 2020 the High Court handed down a further judgment in the Lloyds Bank case regarding equalising for guaranteed
minimum pension benefits (“GMP’s”). The judge found that pension schemes do have a liability to pay top-ups to members who
transferred out in the past. The impact of the additional liabilities amounted to £1,000,000 for the Lovell Pension Scheme which is
disclosed separately in the above table.
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
(Deficit)/surplus in the scheme
Deferred tax
Net surplus
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 (deficit)/surplus during the year:
Net scheme surplus brought forward
Employer contributions
Past service cost and settlements
Net pension interest
Actuarial movement
Net scheme (deficit)/surplus carried forward
2021
£000
2020
£000
15,107
226
504
(641)
69
15,265
14,385
211
1,805
(641)
(343)
15,417
(152)
38
(114)
226
(211)
15
69
343
412
722
504
(1,805)
15
412
(152)
15,227
258
504
(1,450)
568
15,107
13,746
228
—
(1,450)
1,861
14,385
722
(253)
469
258
(228)
30
568
(1,861)
(1,293)
1,481
504
—
30
(1,293)
722
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 arose in relation to many other defined benefit pension schemes.
Renew Holdings plc Annual Report and Accounts 2021
123
Notes to the accounts continued
28 Employee benefits: Retirement benefit obligations continued
IAS 19 “Employee Benefits” continued
Amco Pension Scheme continued
On 20 November 2020 the High Court handed down a further judgment in the Lloyds Bank case regarding equalising for guaranteed
minimum pension benefits (“GMP’s”). The judge found that pension schemes do have a liability to pay top-ups to members who transferred
out in the past. The impact of the additional liabilities amounted to £107,000 for the Amco Pension Scheme which is disclosed within past
service costs and settlements.
The Amco defined benefit scheme recognised an actuarial estimate of £1,698,000 additional liabilities from extending the Barber window
to be in line with recent legal advice received by the Trustee as part of a potential “buy-in” transaction to remove the scheme’s investment
and funding risk. This legal advice indicates that the scheme may not have equalised normal pension age (NPA) as previously assumed
in the early 1990’s, and that the NPA for members in service in May 1991 may be 60 for a higher proportion of their service.
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
2021
£000
(34,862)
(21.4)%
(26,084)
(16.1)%
2020
£000
7,325
3.6%
(1,482)
(0.8)%
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)%
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
2021
£000
69
0.0%
412
2.7%
2020
£000
568
3.8%
2019
£000
1,364
9.0%
(1,293)
(9.0)%
(361)
(2.6)%
2018
£000
(90)
(0.6)%
401
3.0%
2017
£000
(680)
(4.7)%
417
2.8%
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 £8,274,000 (2020: £6,932,000) into these plans during the year. There are also £660,000
(2020: £513,000) of accruals relating to these plans.
29 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, AP Liebenberg, SC Wyndham-Quin, DM Forbes, DA Brown, SD Dasani and SA Hazell, whose total compensation amounted to
£2,746,000 (2020: £2,104,000) all of which was represented by short-term employment benefits, including £682,000 (2020: £362,000)
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.
30 Alternative performance measures
Renew uses a variety of alternative performance measures (’APMs’) 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 financial 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.
124
Renew Holdings plc Annual Report and Accounts 2021
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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 32. The Directors consider this
to be a good indicator of the financing position of the Group.
Adjusted operating profit (£51.211m) and adjusted profit before tax (£50.822m) – 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 (£41.141m) and profit before tax (£40.752m).
Adjusted operating margin (6.5%) – This is calculated by dividing operating profit before exceptional items and amortisation of
intangible assets (£51.211m) by group revenue including share of joint venture (£790.995m) 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
(5.2%) which is calculated by dividing operating profit (£41.141m) from group revenue including share of joint venture (£790.995m).
Adjusted earnings per share (50.51p) – 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 (£790.995m) – This measure is visible on the face of the income statement as Revenue: Group including share
of joint ventures.
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 (£706.682m) – 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 (£51.526m) – 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 (£42.456m) which is also visible in Note 2 part (a).
Adjusted Engineering Services operating profit margin (7.3%) – This is calculated in the same way as adjusted operating profit margin
but based on the adjusted Engineering Services operating profit (£51.526m) and the Engineering Services revenue (£706.682m) figures
as set out above. The equivalent GAAP measure is engineering services operating profit margin (6.0%) which is calculated by dividing
engineering services operating profit (£42.456m) from engineering services revenue including share of joint venture (£706.682m).
Organic growth (19%) reflects the companies’ revenue growth year on year excluding the impact of any acquisitions made in the
current or comparative financial period. For the current financial year the impact of Carnell was excluded for FY’21 and FY’20; Browne
and REL were excluded from the FY’21 calculation.
31 Reconciliation of net cashflow to net cash/(debt)
(Decrease)/increase in net cash and cash equivalents
Decrease in bank borrowings
(Decrease)/increase in net cash from cash flows
Net cash/(debt) at 1 October
Net (debt)/cash at 30 September
32 Analysis of net cash/(debt)
Cash and cash equivalents
Bank loans
Net (debt)/cash
2021
£000
(22,751)
8,752
(13,999)
2020
£000
1,729
8,750
10,479
271
(10,208)
(13,728)
271
At 1 October
2020
£000
13,396
(13,125)
Cash At 30 September
flows
2021
£000
£000
(22,751)
8,752
(9,355)
(4,373)
271
(13,999)
(13,728)
Previously, Renew Holdings plc has not included finance lease liabilities within its measure of net debt due to their asset-backed nature.
Therefore, whilst IFRS 16 has brought additional lease liabilities onto the balance sheet, the standard has had no effect on the Group’s
net debt measure, which has been calculated consistently with previous reporting periods.
Renew Holdings plc Annual Report and Accounts 2021
125
Notes to the accounts continued
32 Analysis of net cash/(debt) continued
Alternative measurement of debt
Some stakeholders include leasing commitments within their definition of net debt. The equivalent figures on that basis are:
Net (debt)/cash (as above)
Finance lease liabilities
Net debt including finance leases
IFRS 16 right of use liabilities
Net debt including all lease liabilities
2021
£000
(13,728)
(4,689)
(18,417)
(10,912)
(29,329)
2020
£000
271
(5,494)
(5,223)
(9,900)
(15,123)
33 Acquisition of subsidiary undertaking – J Browne Group Holdings Ltd
On 26 March 2021, the Company acquired the whole of the issued share capital of J Browne Group Holdings Ltd (“J Browne”) for a cash
consideration of £29.5m plus a net cash and working capital adjustment of £12.0m. The £12.0m represents J Browne’s surplus cash held
in an escrow account at completion which was subsequently paid to the vendors. The net acquisition cost was funded by a combination
of cash and the Group’s existing revolving credit facility provided by HSBC UK Bank plc and National Westminster Bank plc.
The provisional value of the assets and liabilities of J Browne at the date of acquisition were:
Book value
£000
Adjustments
£000
Fair value
£000
2,674
—
453
176
259
3,562
35
24,310
293
24,638
28,200
—
—
—
(9,976)
(72)
(575)
(10,623)
(10,623)
17,577
8,726
12,236
—
317
5,632
26,911
—
—
—
—
26,911
(244)
(2,671)
(2,915)
—
(73)
—
(73)
(2,988)
23,923
11,400
12,236
453
493
5,891
30,473
35
24,310
293
24,638
55,111
(244)
(2,671)
(2,915)
(9,976)
(145)
(575)
(10,696)
(13,611)
41,500
Non-current assets
Intangible assets – goodwill
– other
Property, plant and equipment
Right of use assets
Investment in joint ventures
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Lease liabilities
Current tax liability
Total liabilities
Net assets
126
Renew Holdings plc Annual Report and Accounts 2021
33 Acquisition of subsidiary undertaking – J Browne Group Holdings Ltd continued
Goodwill of £11,400,000 arises on acquisition and will be reviewed annually for impairment. The goodwill is attributable to the expertise
and workforce of the acquired business. Other intangible assets provisionally valued at £12,236,000, which represent customer
relationships and contractual rights, were also acquired and will be amortised over their useful economic lives in accordance with
IAS 38. Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced from April 2021.
Investment in joint ventures
Goodwill of £3,812,000 arises on acquisition and will be reviewed annually for impairment. The goodwill is attributable to the expertise
and workforce of the acquired business. Other intangible assets provisionally valued at £1,820,000, which represent customer
relationships and contractual rights, were also acquired and will be amortised over their useful economic lives in accordance with
IAS 38. Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced from April 2021.
Right of use assets
J Browne’s statutory accounts are reported under FRS 102. The group has made an adjustment for operating leases obtained on
acquisition whereby the leases are capitalised based on discounted future lease payments together with an equivalent leasing liability
to be consistent with IFRS 16 “Leases”.
Trade and other receivables includes £12,000,000 held in an escrow account and represents the part of the acquisition self-funded
by J Browne.
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.
Deferred tax liabilities
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.
If the acquisition of JBC had occurred on 1 October 2020, Group revenue would have been approximately £825.1m and profit before tax
for the year ended 30 September 2021 would have been approximately £53.4m.
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Notes to the accounts continued
34 Acquisition of subsidiary undertaking – Rail Electrification Limited
On 28 May 2021 QTS Group Limited, a wholly owned Group subsidiary, acquired the whole of the issued share capital of Rail Electrification
Limited (“REL”) for a cash consideration of £3m plus a net cash and working capital adjustment of £0.6m. £1.32m deferred consideration
has also been provided which is performance related. The acquisition cost was funded entirely by the subsidiary’s cash reserves.
The provisional value of the assets and liabilities of REL 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
Right of use assets
Current assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
Total assets
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Current liabilities
Borrowings
Trade and other payables
Lease liabilities
Total liabilities
Net assets
—
—
120
5
125
19
800
61
1,080
1,960
2,085
(1)
(31)
(32)
(250)
(658)
(6)
(914)
(946)
1,139
3,607
272
—
—
3,607
272
120
5
3,879
4,004
—
—
—
—
—
3,879
—
(52)
(52)
—
—
—
—
(52)
3,827
19
800
61
1,080
1,960
5,964
(1)
(83)
(84)
(250)
(658)
(6)
(914)
(998)
4,966
Goodwill of £3,607,000 arises on acquisition and will be reviewed annually for impairment. The goodwill is attributable to the
expertise and workforce of the acquired business. Other intangible assets provisionally valued at £272,000, which represent customer
relationships and contractual rights, were also acquired and will be amortised over their useful economic lives in accordance with
IAS 38. Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced from June 2021.
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.
Deferred tax liabilities
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.
If the acquisition of REL had occurred on 1 October 2020, Group revenue would have been approximately £793.6m and profit before tax
for the year ended 30 September 2021 would have been approximately £50.9m.
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35 Acquisition of subsidiary undertaking – Carnell Group Holdings Ltd (formerly Agger Ltd)
On 30 January 2020, the Company acquired the whole of the issued share capital of Carnell Group Holdings Ltd (“Carnell”) for a cash
free/debt free consideration of £38m, after excluding a locked-box working capital adjustment. The acquisition was funded by a
placement of 3,157,894 new ordinary shares raising £15m gross and an expanded revolving credit facility provided by HSBC UK Bank plc
and National Westminster Bank plc.
The value of the assets and liabilities of Carnell at the date of acquisition were:
Non-current assets
Intangible assets – goodwill
– other
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
Total assets
Non-current liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Total liabilities
Net assets
Book value
£000
Adjustments
£000
Fair value
£000
12,142
—
905
13,047
20
13,523
540
3,203
17,286
7,267
19,128
—
26,395
—
—
—
—
—
30,333
26,395
—
—
(9,379)
(9,379)
(9,379)
20,954
(3,634)
(3,634)
—
—
(3,634)
22,761
19,409
19,128
905
39,442
20
13,523
540
3,203
17,286
56,728
(3,634)
(3,634)
(9,379)
(9,379)
(13,013)
43,715
Goodwill of £19,409,000 arose on acquisition and will be reviewed annually for impairment. The goodwill is attributable to the expertise
and workforce of the acquired business. Other intangible assets valued at £19,128,000, which represent customer relationships and
contractual rights, were also acquired and will be amortised over their useful economic lives in accordance with IAS 38. Deferred tax has
been provided on this amount. Amortisation of this intangible asset commenced from February 2020.
Fair value adjustments arising from the acquisition
In accordance with IFRS 3, the Board reviewed 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.
Deferred tax liabilities
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.
If the acquisition of Carnell had occurred on 1 October 2019, Group revenue would have been approximately £638m and profit before
tax for the year ended 30 September 2020 would have been approximately £32.4m.
Renew Holdings plc Annual Report and Accounts 2021
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Note
2021
£000
2020
£000
E
F
G
H
H
I
J
L
606
236,502
237,108
1,250
661
55,284
48
57,243
(164,785)
(107,542)
129,566
—
129,566
7,868
66,378
3,896
1,079
50,345
129,566
726
195,002
195,728
1,500
27,337
55,227
48
84,112
(141,047)
(56,935)
138,793
(13,312)
125,481
7,856
66,378
3,896
821
46,530
125,481
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
9 December 2021
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Company 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 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
2021
£000
30,477
(26,084)
9,129
(16,955)
—
—
2020
£000
6,904
(1,482)
519
(963)
—
—
Total comprehensive income for the year attributable to equity holders of the parent company
13,522
5,941
Company statement of changes in equity
for the year ended 30 September
At 1 October 2019
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
Share
capital
£000
7,533
Share
premium
account
£000
51,904
Capital
redemption
reserve
£000
3,896
Share based
payments
reserve
£000
576
323
14,474
245
Retained
earnings
£000
46,367
6,904
(5,778)
Total equity
shareholders’
funds
£000
110,276
6,904
(5,778)
14,797
245
(1,482)
(1,482)
519
519
At 30 September 2020
7,856
66,378
3,896
821
46,530
125,481
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
12
258
30,477
(10,354)
647
30,477
(10,354)
659
258
(26,084)
(26,084)
9,129
9,129
At 30 September 2021
7,868
66,378
3,896
1,079
50,345
129,566
Renew Holdings plc Annual Report and Accounts 2021
131
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 applicable law and International Accounting Standards in conformity with the
requirements of the Companies Act 2006 (“Adopted IFRSs”). 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.
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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 £30,477,000 (2020: £6,904,000).
The audit fee charged within the profit and loss account amounted to £281,000 (2020: £194,000).
Renew Holdings plc Annual Report and Accounts 2021
133
Notes to the Company accounts continued
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
2021
Number
2020
Number
28
28
£000
4,025
497
188
258
4,968
£000
2,746
1,010
27
27
£000
2,400
369
153
245
3,167
£000
2,104
833
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 2021)
Final (related to the year ended 30 September 2020)
Total dividend paid
Interim (related to the year ended 30 September 2021)
Final (related to the year ended 30 September 2020)
Total dividend paid
2021
Pence/share
2020
Pence/share
4.83
8.33
13.16
£000
3,800
6,554
10,354
—
7.67
7.67
£000
—
5,778
5,778
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 11.17p per Ordinary Share be paid in respect of the year ended 30 September 2021.
This will be accounted for in the 2021/22 financial year.
E Tangible fixed assets
Cost:
At 1 October 2020
Additions
Disposals
At 30 September 2021
Depreciation:
At 1 October 2020
Charge for year
Disposals
At 30 September 2021
Net book value:
At 30 September 2021
At 30 September 2020
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Renew Holdings plc Annual Report and Accounts 2021
Freehold land
and buildings
£000
Plant, vehicles
& equipment
£000
701
—
—
701
116
85
—
201
500
585
320
32
(76)
276
179
67
(76)
170
106
141
Total
£000
1,021
32
(76)
977
295
152
(76)
371
606
726
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F Investments
Shares at cost:
At 1 October 2020
Additions
At 30 September 2021
Provisions:
At 1 October 2020
Provided during the year
At 30 September 2021
Net book value:
At 30 September 2021
At 30 September 2020
Subsidiary
undertakings
£000
341,140
41,500
382,640
146,138
—
146,138
236,502
195,002
On 26 March 2021, the Company acquired the whole of the issued share capital of J Browne Group Holdings (“J Browne”) for a cash
consideration of £29.5m plus a net cash and working capital adjustment of £12.0m. The £12.0m represents J Browne’s surplus cash held
in an escrow account at completion which was subsequently paid to the vendors. The net acquisition cost was funded by a combination
of cash and the Group’s existing revolving credit facility provided by HSBC UK Bank plc and National Westminster Bank plc.
Details of subsidiary undertakings are included in Note S.
G Assets held for resale
Property
2021
£000
1,250
2020
£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
Deferred tax (see Note J)
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
2021
£000
661
63
39,295
9,108
29
959
5,830
55,284
55,945
2020
£000
27,337
75
44,254
7,169
24
—
3,705
55,227
82,564
2021
£000
2020
£000
108,147
105,819
982
3,216
42,945
300
9,195
2,380
804
23,326
225
8,493
164,785
141,047
Renew Holdings plc Annual Report and Accounts 2021
135
Notes to the Company accounts continued
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
2021
£000
—
—
—
108,147
—
108,147
2020
£000
4,373
8,939
13,312
105,819
4,373
110,192
Under the terms of the Renew Holdings plc’s group banking agreement, security has been granted over the Company’s assets.
Deferred tax (asset)/liability:
Defined benefit pension scheme
Future tax losses
Accelerated capital allowances
Other timing differences
£000
£000
231
—
(20)
(1,170)
(959)
9,568
(359)
(29)
(241)
8,939
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 2021, this loan was £Nil
(2020: £230,000).
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:
2021
£000
2020
£000
78,681,334 (2020: 78,555,054) Ordinary Shares of 10p each
7,868
7,856
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 15 December 2020 126,280 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 2021, there were 860,857 options outstanding under the scheme. On 4 December 2020, options to subscribe for
a further 242,161 Ordinary Shares were granted. During the year 126,280 options were exercised and 119,720 did not vest. No options
lapsed during the year.
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 dependent on absolute growth in the Company’s Total Shareholder Return (’TSR’), and the other
half is 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. 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.
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L Share capital continued
Share options continued
Renew Holdings plc Long Term Incentive Plan continued
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.
£258,000 (2020: £245,000) has been charged to administrative expenses in accordance with FRS 102. There is no impact on net assets
since an equivalent amount has been credited to the share based payments reserve. 126,280 options were exercised and 119,720
options did not vest 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 2021
were as follows:
Date of grant
3 December 2018
20 February 2020
4 December 2020
Total
Awards outstanding at 30 September 2021
– Directors and employees
Exercise price
Price at date of grant
Maximum option life
319,126
10.0p
350.00p
10 years
299,570
10.0p
548.00p
10 years
242,161
10.0p
522.00p
10 years
860,857
Assumed option life for purposes of valuation
2.83 years
2.61 years
2.79 years
Expected volatility
Risk free interest rate
Value per option
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
28%
0.75%
226.0p
Land and
buildings
£000
222
384
—
606
27%
0.46%
519.0p
38%
(0.09)%
495.0p
Other
£000
4
—
—
4
Total
2021
£000
226
384
—
610
Total
2020
£000
244
435
178
857
During the year £283,000 (2020: £268,000) 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 2021 (2020: £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.
Renew Holdings plc Annual Report and Accounts 2021
137
Notes to the Company accounts continued
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 (2020: £153,000) into these plans during the year. There are also £13,000
(2020: £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,
AP Liebenberg, SC Wyndham-Quin, DM Forbes, DA Brown, SD Dasani and SA Hazell, whose total compensation amounted to £2,746,000
(2020: £2,104,000) all of which was represented by short-term employment benefits including £682,000 (2020: £362,000) 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 2021 shows a surplus of
£661,000 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.
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
2021
As at
30 September
2020
As at
30 September
2019
4.0%
4.3%
2.0%
2.7%
3.5%
3.4%
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 95% S2NA tables with future improvements in line with the
Continuing Mortality Investigations 2020 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 22.5 years and the further life expectancy of a male aged
65 in 2040 is 23.8 years.
The assets in the Lovell scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2021
£000
158,685
880
3,362
Current
allocation
97%
1%
2%
Value as at
30 September
2020
£000
87,497
114,039
2,149
162,927
100%
203,685
Value as at
30 September
2019
£000
89,317
106,775
666
196,758
Current
allocation
43%
56%
1%
99%
Current
allocation
45%
54%
1%
100%
The Trustees of the Lovell Pension Scheme purchased a bulk annuity from Rothesay life in November 2020 to de-risk the defined benefit
scheme obligation. This covers all remaining insured scheme benefits following previous bulk annuity transactions in 2011 and 2016.
138
Renew Holdings plc Annual Report and Accounts 2021
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Defined benefit pension schemes continued
The Company took the decision to fund the buy-in based on the following considerations:
• a buy-in will remove volatility of the scheme from the balance sheet of the Company, and no further contributions would be expected; and
• the buy-in will transfer the pension risk associated with the scheme to a third party insurer. The only risk remaining will be the
counterparty risk of the insurer.
The difference between the annuity purchase price and the defined benefit obligation covered by the policy has been accounted for
in other comprehensive income. The accounting treatment is based on the following considerations made by the Company:
• the employer is not relieved of primary responsibility for the obligation. The policy simply covers the benefit payments that continue
to be payable by the scheme;
• the contract is effectively an investment of the scheme; and
• the contract provides the option to convert the annuity into individual policies which would transfer the obligation to the insurer
(known as a “buy-out”). Whilst this course of action may be considered in future, this is not a requirement and a separate decision
will be required before any buy-out proceeds. There are currently no plans either by management or Trustees to convert the buy-in
contract to individual policies.
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. On 26 November 2020, 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” where the annuity policy remains an asset of the scheme. Following the conclusion of the buy-in, all the scheme’s liabilities
are now matched within the annuities which has removed the scheme’s investment and funding risk. Consequently, there has been a
reduction in the FRS 102 Retirement Benefit assets in the Group’s accounts for the year ended 30 September 2021. The next triennial
valuation is due as at 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 £2.0m. 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
2021
£000
(34,862)
(21.4)%
(26,084)
(16.1)%
2020
£000
7,325
3.6%
(1,482)
(0.8)%
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)%
On 26 November 2020, 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” where the annuity policy remains an asset of the scheme.
Following the conclusion of this buy-in all of the schemes liabilities are now matched with annuities which has removed the scheme’s
investment and funding risks. As a consequence there has been a reduction in the FRS 102 Retirement Benefit asset in the Company’s
accounts for the year ended 30 September 2021.
On 20 November 2020 the High Court handed down a further judgment in the Lloyds Bank case regarding equalising for guaranteed
minimum pension benefits (“GMP’s”). The judge found that pension schemes do have a liability to pay top-ups to members who
transferred out in the past. The impact of the additional liabilities amounted to £1,000,000 for the Lovell Pension Scheme which
is disclosed separately in the next table.
Renew Holdings plc Annual Report and Accounts 2021
139
Notes to the Company accounts continued
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
Guaranteed minimum payment equalisation
Actuarial movement due to experience on benefit obligation
Actuarial movement due to changes in financial assumptions
Actuarial movement due to changes in demographic assumptions
2021
£000
2020
£000
203,685
196,758
2,978
56
(8,930)
—
(34,862)
162,927
176,348
2,565
61
—
(8,930)
1,000
(237)
(10,217)
1,676
3,703
4,313
(8,401)
(13)
7,325
203,685
172,685
3,201
56
—
(8,401)
—
(596)
8,388
1,015
Total fair value of scheme obligations carried forward
162,266
176,348
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
Guaranteed minimum payment equalisation
Net pension interest
Actuarial movement
Net scheme surplus carried forward
140
Renew Holdings plc Annual Report and Accounts 2021
661
(231)
430
(61)
—
(61)
2,978
(2,565)
413
(34,862)
8,778
(26,084)
27,337
(9,568)
17,769
(56)
(13)
(69)
3,703
(3,201)
502
7,325
(8,807)
(1,482)
27,337
24,073
(61)
—
56
(1,000)
413
(26,084)
661
(56)
(13)
4,313
—
502
(1,482)
27,337
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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
Incorporation & principal
place of business
Proportion of Ordinary
Shares held by the Company
Amco Group Holdings Ltd
Owned by Renew Holdings plc
England and Wales
Britannia Group Ltd
Owned by Renew Holdings plc
England and Wales
Carnell Group Holdings Ltd
Owned by Renew Holdings plc
England and Wales
Clarke EV Ltd
Clarke Telecom Ltd
Inhoco 3520 Ltd
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
J Browne Group Holdings Ltd
Owned by Renew Holdings plc
England and Wales
Lewis Civil Engineering Ltd
Owned by Renew Holdings plc
England and Wales
QTS Group Ltd
Renew Ltd
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Renew Corporate Director Ltd
Owned by Renew Holdings plc
England and Wales
Renew Fleet Management Ltd
Owned by Renew Holdings plc
England and Wales
Renew Group Ltd
Renew Nominees Ltd
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Renew Pension Trustee Company Ltd
Owned by Renew Holdings plc
England and Wales
Renew Property Developments Ltd
Owned by Renew Holdings plc
England and Wales
Seymour (C.E.C.) Holdings Ltd
Owned by Renew Holdings plc
England and Wales
Shepley Engineers Ltd
V.H.E. Construction PLC
VHE Land Projects Ltd
YJL Ltd
YJL Homes Ltd
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
Owned by Renew Holdings plc
England and Wales
YJL Pension Trustee Company Ltd
Owned by Renew Holdings plc
England and Wales
Amalgamated Construction Ltd
Owned by subsidiary
England and Wales
Amalgamated Construction (Scotland) Ltd
Owned by subsidiary
Amco Engineering Ltd
Amco Group Ltd
Amco Giffen Ltd
Amco Rail Ltd
Amco Rail Engineering Ltd
Britannia Construction Ltd
Carnell Support Services Ltd
David Lewis Civil Engineering Ltd
Geodur UK Ltd
Giffen Holdings Ltd
Giffen Group Ltd
’Hire One’ Ltd
J Browne Construction Ltd
J Browne Capital Delivery Ltd
J Browne Developer Services Ltd
J Browne Plant Ltd
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
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
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%
Renew Holdings plc Annual Report and Accounts 2021
141
Notes to the Company accounts continued
S Subsidiary undertakings continued
Subsidiary undertakings and joint ventures
Knex Pipelines & Cables Ltd
Mothersill Engineering Ltd
Owned by subsidiary
Owned by subsidiary
Nuclear Decontamination Services Ltd
Owned by subsidiary
Pine Plant Ltd
P.P.S. Electrical Ltd
QTS Rail Ltd
QTS Specialist Plant Services Ltd
QTS Training Ltd
Rail Electrification Ltd
Renew Civil Engineering Ltd
Renew Construction Ltd
Renew Specialist Services Ltd
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
Seymour (Civil Engineering Contractors) Ltd
Owned by subsidiary
VHE (Civil Engineering) Ltd
VHE Equipment Services Ltd
VHE Technology Ltd
Walter Lilly & Co Ltd
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
West Cumberland Engineering Ltd
Owned by subsidiary
YJL Construction Ltd
YJL Infrastructure Ltd
YJL London Ltd
Blackwater Plant Hire Ltd
Cappagh Brown Utilities Ltd
Enisca Browne Ltd
Inject-O-Matic Guarantee Ltd
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
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
Northern Ireland
England and Wales
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
28.9%
The registered office of Amalgamated Construction (Scotland) Ltd is 5 Carradale Crescent, Glasgow, G68 9LE.
The registered office of Blackwater Plant Hire Ltd and Cappagh Browne Utilities Ltd is Meelin House, Unit 2 Pavilion Business Centre,
6 Kinetic Crescent, Enfield, EN3 7FJ.
The registered office of Enisca Browne Ltd is c/o Enisca Derryloran Industrial Estate, Sandholes Road, Cookstow, County Tyrone,
Northern Ireland, BT80 9LU.
The registered office of QTS Group Ltd and its subsidiaries is Rench Farm, Drumclog, Strathaven, Lanarkshire, ML10 6QJ.
The registered office of all other subsidiary undertakings is 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB.
142
Renew Holdings plc Annual Report and Accounts 2021
Directors, officers and advisors
(Non-executive Chairman)
(Chief Executive Officer)
(Chief Financial Officer)
(Independent non-executive)
(Independent non-executive)
(Independent non-executive)
(Executive Director)
Directors
D M Forbes
P Scott
S C Wyndham-Quin
S D Dasani
D A Brown
S A Hazell
A P 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
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
Nominated advisor and broker
Numis Securities Limited
London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Company Secretary
S Wyndham-Quin
Company number
650447
Registered address
3175 Century Way
Thorpe Park
Leeds
LS15 8ZB
Website address
www.renewholdings.com
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Renew Holdings plc Annual Report and Accounts 2021
143
Shareholder information
Annual General Meeting
26 January 2022
Results
Announcement of interim results – May 2022
Preliminary announcement of full year results – December 2022
Signal Shares
Signal Shares is a secure online site where you can manage your shareholding quickly and easily. To register for Signal Shares 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
shareholderenquiries@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)371 664 0300 (calls are charged at the standard geographical 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. By email Shareholderenquiries@linkgroup.co.uk.
144
Renew Holdings plc Annual Report and Accounts 2021
Our subsidiary businesses
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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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
The Old Town Hall
Duke Street
Whitehaven
Cumbria
CA28 7NU
Tel: 01946 599022
Carnell
Gothic House
Market Place
Penkridge
Staffordshire
ST19 5DJ
Tel: 01785 715 472
Browne
Meelin House
Unit 1–2 Pavilion Business Centre
6 Kinetic Crescent
Enfield
EN3 7FJ
Tel: 020 3300 0033
CBP009751
Renew Holdings plc’s commitment to environmental issues is reflected
in this Annual Report, which has been printed on Arcoprint, an FSC®
certified material. This document was printed by Pureprint Group using
its environmental print technology, with 99% of dry waste diverted from
landfill, minimising the impact of printing on the environment. The
printer is a CarbonNeutral® company.
Both the printer and the paper mill are registered to ISO 14001.
Renew Holdings plc Annual Report and Accounts 2021
145
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