Member Article

Leeds engineering services firm Renew acquires specialist business for £14.8 million

Leeds- based Renew, the engineering services group supporting UK infrastructure, has acquired Forefront Group Ltd for a cash consideration of £14.8 million.

The acquisition has been funded from the Group’s cash resources and a four year term loan of £12 million provided by HSBC Bank plc and will be earnings enhancing to Renew.

Forefront, a specialist engineering business focused in the gas infrastructure market, operates in the South East of England with its head office in Leigh-on-Sea and was founded in 1995.

The business focuses on the replacement of gas mains and other critical services for National Grid and Southern Gas Networks in London and the South East.

Forefront provides its services through framework agreements and employs approximately 350 skilled personnel.

The gas infrastructure market is highly regulated and Forefront’s revenues are derived from the 30 year gas mains replacement programme which involves the replacement of iron gas mains pipes with polyurethane mains. Forefront specialises in both low and medium pressure outlets up to 48“ diameter.

The business also deals with emergency gas leaks and has a specialised under pressure drilling capability. Forefront also provides a complete reinstatement service and operates its own material recycling facility.

In the year ended 29 March 2013, Forefront’s audited accounts reported turnover of £26.9 million and an operating profit of £1.7 million (6.3%).

Forefront’s financial performance in the year ended 28 March 2014 showed a reduction in revenue to £23.3 million and a breakeven operating result as workflow was reduced prior to the commencement of a new framework 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.

Forefront was principally owned by Harwood Capital and associated entities and the company’s founder and Chief Executive, Bradley Beard. Mr Beard has entered into a new 12 month service contract, which cannot be terminated by either party within the first two years and the whole Forefront management team will remain with the business. Mr Beard will report to Renew’s chief executive, Brian May.

Roy Harrison OBE, chairman of Renew, commented: “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.

“As part of the Renew Group, Forefront, which has a leading industry reputation, will continue to develop its strong, independent brand. The gas mains network replacement programme provides Forefront with long term visibility and excellent growth opportunities.”

HSBC has again provided Renew with the debt facility used to fund the acquisition. Neil Abbott led the team.

Renew was advised by Sean Wyndham–Quin from SPARK Advisory Partners and Debbie Jackson & Graham Mackenzie from Walker Morris.

Forefront was advised by Paul Hardy from Hardy Transaction Management and Nick McCarthy & John Turnbull from Bircham Dyson Bell.

This was posted in Bdaily's Members' News section by Clare Burnett .