REG - Renew Holdings PLC - Acquisition of Excalon Limited

Renew HoldingsAnnouncement

11/06/2024 07:00

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RNS Number : 8775R  Renew Holdings PLC  11 June 2024

11 June 2024

 

Renew Holdings plc

 

("Renew" or the "Group")

 

Acquisition of Excalon Limited

 

Renew enters into the electricity transmission and distribution market

 

Renew (AIM: RNWH), the leading Engineering Services Group supporting the
maintenance and renewal of critical UK infrastructure, is pleased to announce
that it has acquired Excalon Holdings Limited ("Excalon") for a total
consideration of up to £26m (the "Acquisition"). The Acquisition represents
an excellent strategic fit for the Group, allowing Renew to expand into the
electricity transmission and distribution market. This is consistent with the
Group's strategy of targeting end markets where maintenance and renewals
programmes benefit from long-term, non-discretionary funding programmes.

 

Excalon, based in Salford, is a leading infrastructure contractor specialising
in the provision of high voltage and extra high voltage infrastructure to the
UK electricity sector. Excalon has a number of long-term frameworks with
electricity Distribution Network Operators ("DNOs") across the UK. The UK
electricity DNO market is regulated by Ofgem and operates in 5-year control
period funding cycles. The RIIO ED2 cycle commenced in April 2023 with the
latest determination of funding set at £22.2bn. Entering this market allows
Renew to access both the opportunities in ED2 as well as the upgrade of the
grid that is required to support the UK's zero carbon generation and
renewables sector.

 

The initial consideration of £22m has been funded from the Group's existing
cash and banking facilities. Additional consideration of up to £2m will
become payable in 2025 along with a further £2m in 2026, conditional upon the
vendors remaining with the businesses and specific profit targets being
achieved. The valuation of the business was based on Excalon generating a
sustainable EBITDA of at least £3m per annum and the profitability of Excalon
is expected to be in line with Renew's current Engineering Services operating
profit margin. The Acquisition will be immediately earnings enhancing for the
Group and Renew will continue to have a very strong balance sheet.

 

Paul Scott, Chief Executive Officer of Renew, commented:

 

"This acquisition broadens Renew's exposure to another critical UK
infrastructure market, presenting tremendous long-term growth opportunities.
It is consistent with our stated strategic objective to expand into new
complimentary sectors that have high barriers to entry coupled with resilient
attributes. This is a highly regarded business with a strong track record in
this specialist sector, and I am delighted to welcome the management and staff
of Excalon to the Renew family."

 

More information on Excalon can be found on its website at: www.excalon.com
(http://www.excalon.com)

 

For further information, please contact:

 

 Renew Holdings plc                                      www.renewholdings.com
 Paul Scott, Chief Executive Officer                     via FTI Consulting
 Sean Wyndham-Quin, Chief Financial Officer              020 3727 1000

 Deutsche Numis (Nominated Adviser and Joint Broker)     020 7260 1000
 Stuart Skinner / Kevin Cruickshank / Will Wickham

 Peel Hunt LLP (Joint Broker)                            020 7418 8900
 Ed Allsopp / Pete Mackie / Charlotte Sutcliffe

 FTI Consulting (Financial PR)                           020 3727 1000
 Alex Beagley / Tom Hufton / Amy Goldup / Matthew Young  Renew@fticonsulting.com

 

 

About Renew Holdings plc

Renew 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: Engineering
Services, which accounts for over 95 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, Landmark and
Science markets in London and the Home Counties.

 

For more information please visit the Renew Holdings plc
website: www.renewholdings.com (http://www.renewholdings.com/)

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