REG - Renew Holdings PLC - Acquisition of Full Circle

Renew HoldingsAnnouncement

07/10/2024 07:00

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RNS Number : 0869H  Renew Holdings PLC  07 October 2024

7 October 2024

 

Renew Holdings plc

 

("Renew" or the "Group")

 

Acquisition of Full Circle

 

Renew enters high-growth onshore wind services 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 Full Circle Group Holding B.V. ("Full Circle" or the
"Company"), a specialist provider of repair, maintenance and monitoring
services for onshore wind turbines in the UK and Europe for a total cash
consideration of €60.0m (£50.5m), funded from the Group's existing cash
resources and banking facilities (the "Acquisition"). Full Circle was
controlled and owned predominantly by AtlasInvest Holding, the Belgian family
holding specialised in the energy sector.

 

Acquisition Highlights

 

·      Entry into the highly fragmented onshore wind services market
which is forecast to grow at 7.7% CAGR from 2024 to 2030 as both the UK and
Europe seek to deliver on their commitments to achieve Net Zero 2050 targets

·      Technology-enabled platform providing 24/7 remote maintenance
across nine countries from a centralised control centre in Amersfoort, the
Netherlands

·      Attractive servicing model built on strong customer
relationships, with long-term, recurring full-scope contracts (c.7 years
average remaining contract duration with c.95% renewal rate)

·      Strong financial profile: FY21-23 revenue CAGR of 25%, delivering
14%+ EBIT margins which will be accretive to Group margins

·      Excellent revenue visibility for FY25 and beyond with c.85% of
Operations and Maintenance (O&M) contracts already secured and a strong
pipeline of additional opportunities which gives overall revenue visibility
for FY25 of c.75%

·      Trans-European presence with c.75% of revenue currently generated
through UK operations

·      Experienced and committed management team in place to execute
growth strategy

·      The Acquisition is expected to be earnings enhancing to the Group
in the first full year of ownership, with ROIC in excess of the Group's cost
of capital by the third full year of ownership

 

Paul Scott, Chief Executive Officer of Renew, commented:

 

"The acquisition of Full Circle represents an exciting opportunity for the
Group to enter a high-growth, and fragmented onshore wind services market.
Full Circle operates a scalable technology-enabled platform across a diverse
customer base with existing long-term contracts and a fast-growing brand in
the UK and across Europe. The company's proven track record in its core
markets, and highly experienced management team mean the business is well
positioned to service other turbine technologies and geographies both through
acquisition and an organic growth strategy.

 

"With governments across Europe reaffirming their commitments to achieving Net
Zero by 2050, the addition of Full Circle's industry-leading offering will
allow us to play a pivotal role in supporting the green energy transition and
benefit from the long-term, non-discretionary funding programmes that underpin
it. I am delighted to welcome the Full Circle team to the Renew family."

 

Strategic Rationale

 

The Acquisition represents a compelling strategic fit for Renew, entering the
high-growth renewable energy services market with a leading position, in line
with the Group's stated strategy of capitalising on the green energy
transition. With governments in the UK and across Europe reaffirming their
commitment to achieving net zero carbon emissions by 2050, the opportunity
within this sector is significant and growing at pace. Through the addition of
Full Circle's best-in-class, direct delivery service model, Renew will be able
to fully capitalise on this transition, while benefitting from the long-term,
non-discretionary maintenance programmes that will continue to underpin it.

 

Renewable energy is forecast to become the largest component of Europe's total
energy mix by 2050. The onshore wind market is well-established and forecast
to grow at 7.7% CAGR over the next six years. The market for maintenance and
renewal of these turbines is highly fragmented and represents a significant
opportunity for Full Circle to grow organically and through acquisition. As
part of the Group, Full Circle will benefit from Renew's proven track record
of successful M&A and from its best practise experience in the wider
engineering services market.

 

About Full Circle

 

Full Circle, headquartered in Amersfoort, the Netherlands, is a leading
provider of onshore wind turbine repair, maintenance and monitoring  services
to the European renewable energy market. The Company operates on a scalable
platform, with a directly employed workforce of c.160 highly-skilled
technicians located near operational sites in the UK, the Netherlands, France,
Italy and Greece.

 

This trans-European network is connected via a centralised control centre in
Amersfoort, offering 24/7 remote monitoring of all turbine types with the
ability to rapidly deploy local resources. This turbine management system
continuously analyses equipment to facilitate predicative maintenance services
significantly reducing turbine downtime. Full Circle's inspection teams
further ensure turbine safety, efficiency, and compliance through regular
checks and maintenance utilising AI-enabled drone technology.

 

Full Circle's established track record means it is well positioned to scale
alongside the market, with a large proportion of installation activity taking
place in geographies where the Company has existing operations. All core
markets are set to grow installed capacity in the medium term, with
governments, including in the UK, reviewing planning permission requirements
to accelerate the creation of further wind projects.

 

Full Circle generates c.75% of its revenue from UK-based operations, with a
number of long-term frameworks with leading wind park owners and is
selectively seeding and growing its presence in targeted European territories.
 

 

For the year ended 31 December 2023 Full Circle generated revenue of €25.8m,
adjusted EBITDA €5.4m and adjusted EBIT €4.6m.

 

Consideration for the Acquisition

 

The cash consideration of €60.0m (£50.5m) has been funded from the Group's
existing cash resources and banking facilities.

 

Increased borrowing facilities

 

Alongside the Acquisition, Renew has increased its existing RCF facility to
£120m (from £80m) providing continued headroom to deliver future
acquisitions in line with the Group's strategy. The terms of the RCF remain as
before, with the facility expiring in November 2026.

 

Investor Presentation

 

A presentation detailing more information on the Acquisition is available to
watch on the Group's website here:
 https://www.renewholdings.com/investors/shareholder-documents
(https://www.renewholdings.com/investors/shareholder-documents) .

 

More information on Full Circle can be found on its website at:
www.fullcirclewindservices.com
(file:///C%3A/Users/s.skinner/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/VNJYQFJ1/www.fullcirclewindservices.com)

 

ENDS

 

 

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 on Engineering Services in the key markets of
Rail, Infrastructure, Energy (including Wind and Nuclear) and Environmental
which are largely governed by regulation and benefit from non-discretionary
spend with long-term visibility of committed funding.

 

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

 

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