Bolt-on acquisitions possible for Renew

RENEW Holdings’s strong balance sheet suggests bolt-on acquisitions are possible, according to industry research.

Yesterday, Leeds-based Renew, which operates in UK infrastructure markets, reported that it’s contracted order book at the end of September stood at £416m (2012: £331m), a 26% increase, with the Engineering Services order book up 28% to £301m (2012: £235m). It went from debt of £5.5m into the black with £2.8m in the bank and also highlighted its future intentions to grow group revenue to over £500m.

Following the results, Numis Securities, an independent investment banking and broking group, said the Lewis acquisition, which took place earlier this year and saw Renew buy the firm for £7.9m, will boost growth in the coming year. It said rising order books reflect both better markets and also Renew’s enhanced position within these areas. It added that “the strength of the balance sheet also suggests further bolt-on acquisitions are possible.”

Renew said that due to its record order book, the firm is “pretty well secure” for the future.

Chief executive Brian May, said: “We are back in net cash so as and when acquisition opportunities come along, we have got the power to go for them.To get to the medium-term target of £500m, it is likely this will depend on acquisitions, but it is difficult to call whether we will do that at this early stage.”

Renew said it is pleased to have bought Lewis this year, describing it as a business which ticks all the boxes of the type of business it would like to acquire.

Engineering Services revenue was up 9%, including organic growth of 6% to £232.4m (2012: £214.1m). Renew said there is no reason this growth won’t continue.

May added: “Our growth will be organically and acquisitively, but we are pretty confident we can get 6% organic growth again.”