Renew Holdings PLC Acquisition & Trading Update (6164T)
March 26 2021 - 3:00AM
UK Regulatory
TIDMRNWH
RNS Number : 6164T
Renew Holdings PLC
26 March 2021
26 March 2021
Renew Holdings plc
("Renew" or the "Group" or the "Company")
Acquisition & Trading Update
Immediately earnings enhancing acquisition strengthens Renew's
exposure to UK water market
Renew (AIM: RNWH), the leading Engineering Services Group
supporting UK infrastructure, announces that it has agreed to
acquire the entire issued share capital of J Browne Group Holdings
Limited ("J Browne"), ("the Acquisition") for a cash consideration
of GBP29.5m. The Group also provides an update on trading in
advance of its interim results for the half year ending 31 March
2021.
Acquisition
J Browne is 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. J Browne delivers multi-disciplinary infrastructure and
non-infrastructure services through a number of longstanding
framework agreements, across all disciplines in the water sector.
In addition, J Browne provides utility connections and
infrastructure services to the developer market in London & the
Home Counties.
In the year ended 31 March 2020, J Browne reported profit before
tax of GBP5.5m on turnover of GBP79.2m (including share of joint
ventures). In its current financial year to 31 March 2021, the
business has seen a reduction in activity due to the transition
from AMP6 to AMP7 and is expected to report turnover of GBP63.3m,
but this has now increased back to historic run-rate levels as
activity has normalised in AMP7.
The Acquisition represents an excellent strategic fit, adding
material scale to Renew's water business and brings new water
clients into the Group. The water sector is an attractive market
with GBP51bn committed by Ofwat to deliver service improvements as
part of the current five-year investment period (AMP7) which runs
to 2025. The Acquisition is expected to be immediately earnings
enhancing and to deliver high single digit earnings accretion on a
full year basis.
The consideration of GBP29.5m on a cash-free/debt-free basis
will be funded by a combination of cash and the Group's existing
revolving credit facility provided by HSBC and Natwest. There is no
deferred consideration payable. Post-acquisition, Renew will
continue to have net debt/EBITDA of significantly less than 1x.
Trading Update
Group trading for the first half of the year is expected to be
ahead of the previous financial year and in-line with management's
expectations. As outlined in the AGM statement on 27 January 2021,
the latest national lockdown has not had any material impact on
trading and the Group continues to experience continuity in demand
for its services across all markets. As a result, the Board remains
confident in delivering consensus expectations for the full
year.
Net debt and cash generation are also in line with expectations.
The Group's order book continues to be underpinned by long-term
framework positions, including new awards during the first half of
the year, and is expected to be in-line with that reported at our
AGM in January.
Renew's interim results for the six months ending 31 March 2021
will be announced on Tuesday 18 May 2021.
Paul Scott, Chief Executive of Renew, commented:
"This acquisition broadens Renew's exposure to the UK water
market and is consistent with our strategic objectives. This market
offers attractive long-term growth opportunities underpinned by
committed regulatory spend and is a sector we understand well from
our established relationships in other water regions. We have known
Jeremy and his team for many years and have tracked how they have
successfully grown a business with an excellent reputation for
directly delivering reliable engineering services to a number of
water companies across the south of England, including Thames
Water, the largest in the UK. This is a business that shares the
values of Renew and I am delighted to welcome the management and
staff of J Browne to the Renew family."
Jeremy Browne, Chairman of J Browne commented:
"Under Renew's ownership, J Browne enters an exciting new stage
for the business. It was critical for us to have an owner who
shares the values that have contributed to our success and one
which has demonstrated the necessary expertise to support our
growth ambitions. The Renew business model and strategy fits
perfectly with these aspirations and I believe the J Browne brand
will continue to flourish alongside the many other highly respected
Renew subsidiary businesses."
For further information, please contact:
Renew Holdings plc www.renewholdings.com
Paul Scott, Chief Executive Officer via FTI Consulting
Sean Wyndham-Quin, Chief Financial 020 3727 1000
Officer
Numis Securities Limited (Nominated
Adviser & Broker)
Stuart Skinner/ Kevin Cruickshank 020 7260 1000
FTI Consulting (Financial PR) 020 3727 1000
Alex Beagley/ James Styles Renew@fticonsulting.com
About Renew Holdings plc
Renew Holdings plc is a leading UK Engineering Services
business, performing a critical role in keeping the nation's
infrastructure functioning efficiently and safely. The Group
operates through independently branded subsidiaries across its
chosen markets, delivering non-discretionary maintenance and
renewal tasks through its highly skilled, directly employed
workforce.
Renew's activities are focused into two business streams:
Specialist Engineering, which accounts for over 90 per cent of the
Group's adjusted operating profit, focuses on the key markets of
Rail, Infrastructure, Energy (including Nuclear) and Environmental
which are largely governed by regulation and benefit from
non-discretionary spend with long-term visibility of committed
funding.
Specialist Building focuses on the High Quality Residential and
Science markets in London and the Home Counties.
For more information please visit the Renew Holdings plc
website: www.renewholdings.com
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