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 £29.5m. 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 £5.5m on turnover of £79.2m (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 £63.3m, 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 £51bn 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 £29.5m 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."

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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