4th Aug 2014 07:10
LONDON (Alliance News) - Renew Holdings PLC Monday said it has bought gas infrastructure market engineer Forefront Group Ltd for GBP14.8 million in cash, giving it a foothold in the market that is seeing 30-year-old iron gas mains replaced with polyurethane pipes.
The company said the acquisition, which it expects to boost earnings, has been funded from its cash resources as well as a four-year, GBP12 million, term loan from HSBC Bank.
"The acquisition of Forefront takes the group into a new sector within the energy market and is in line with our strategy of broadening our range of engineering services supporting critical UK infrastructure," Renew Chairman Roy Harrison said in a statement. "The gas mains network replacement programme provides Forefront with long term visibility and excellent growth opportunities."
Forefront has its head office in Leigh-on-Sea and was founded in 1995. It operates in the south east of England. Its revenue in the year to March 29, 2013, was GBP26.9 million, and its operating profit was GBP1.7 million. That fell to GBP23.3 million and break even, respectively, in the most recent financial year, but that was before Forefront started a new framework contract for National Grid.
"Revenue and margins have now returned to previous levels and established framework positions provide the Renew board with confidence that Forefront will deliver both growth and earnings which are accretive to Renew's Engineering Services current operating margin," Renew said in its statement.
Renew shares were up 0.9% at 233.00 pence early Monday.
By Steve McGrath; [email protected]; @stevemcgrath1
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