Severn Trent Plc - Purchase of Agrivert

RNS Number : 1979Z

Severn Trent PLC

30 August 2018

 

LEI: 213800RPBXRETY4A4C59

Severn Trent Plc - Purchase of Agrivert

Severn Trent today announces the purchase of Agrivert Holdings Ltd and its subsidiaries containing the UK Operating businesses for a total consideration of £120 million.

Founded in 1994, Agrivert UK is a leader in renewable energy generation from food waste, with five well-established food waste anaerobic digestion (AD) plants and five green and comingled waste composting sites, located to the south and west of the Severn Trent region.

Agrivert's UK operations will be added to Severn Trent's existing non-regulated Green Power Business, and will be reported within the Business Services segment.  The plants will complement Green Power's two operating food waste AD plants at East Birmingham (Coleshill) and West Birmingham (Roundhill) and one under construction in Derby (on track for commissioning by the end of the financial year). The acquisition will add 106 GWh per annum of energy generation to the 354 GWh currently produced by Severn Trent's broader energy and renewables portfolio.

The purchase of Agrivert UK will take Severn Trent's investment in energy and renewables to approximately £300m by 2020, reflecting its commitment to become a sector leader in sustainable resource efficiency, whilst driving down carbon emissions. 

Liv Garfield, Severn Trent Chief Executive said; "We're delighted to welcome Agrivert UK into the Severn Trent Group. Renewable energy is strategically important to Seven Trent and the UK as a whole as we work towards achieving our decarbonisation targets and delivering attractive shareholder returns.  Agrivert UK strengthens our established presence in anaerobic digestion where we have been leaders in the water sector for many years. We have worked in partnership with Agrivert UK on a number of projects in recent years and have been hugely impressed by their engineering capability and expertise."

Alexander Maddan, Agrivert's Chief Executive said "As we finalised the latest expansion of our AD fleet, it was a natural juncture to create an even more competitive business by combining Agrivert UK with the Severn Trent Group.  Our familiarity with the Severn Trent Group gives us great confidence that the Agrivert UK business is being transferred into good hands, allowing Agrivert Limited to concentrate on the engineering and overseas markets."

The total enterprise consideration is £120 million, subject to customary closing adjustments, which will be paid from existing cash and bank facilities, including the repayment of approximately £60 million of debt at closing.

In the last full financial year ended 31/12/17 the acquired Agrivert businesses recorded revenue of £26million and EBITDA of £10 million.

It is anticipated the transaction will be completed by the end of the calendar year.

EY Corporate Finance acted as sole financial adviser to Severn Trent.

Notes

Facts about Agrivert UK:

·    Agrivert has been at the forefront of the organic waste recycling market for 20 years.

·    They have long term strategic contracts with local councils and 20-year renewable energy subsidies backed by HM Government.

·    They specialise in operating facilities to process and recycle organic matter, processing over 310,000 tonnes of solid organic waste in 2017.

Facts about Severn Trent Green Power:

·    Severn Trent Green Power was established in 2009 to utilise the experience gained in anaerobic digestion across a broader portfolio of assets.

·    It has grown successfully to include two food waste anaerobic digestion plants, a crop anaerobic digestion plant, six wind turbines and 33 solar sites.

·    In the last full financial year ended 31/03/18 Severn Trent's Food Waste business recorded revenue of £13 million and EBITDA of £3 million.

·    Severn Trent Green Power is part of the Business Services segment of Severn Trent Plc, separate from the Water and Waste Water business regulated by OFWAT.

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Cautionary statement regarding forward-looking statements

This document contains statements that are, or may be deemed to be, 'forward-looking statements' with respect to Severn Trent's financial condition, results of operations and business and certain of Severn Trent's plans and objectives with respect to these items.

Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'projects', 'potential', 'reasonably possible', 'targets', 'goal', 'estimates' or words with a similar meaning, and, in each case, their negative or other variations or comparable terminology. Any forward-looking statements in this document are based on Severn Trent's current expectations and, by their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future.

Forward-looking statements are not guarantees of future performance and no assurances can be given that the forward-looking statements in this document will be realised. There are a number of factors, many of which are beyond Severn Trent's control that could cause actual results, performance and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: the Principal Risks disclosed in our latest Annual Report and Accounts (which have not been updated since the date of its publication); changes in the economies and markets in which the group operates; changes in the regulatory and competition frameworks in which the group operates; the impact of legal or other proceedings against or which affect the group; and changes in interest and exchange rates.

All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Severn Trent or any other member of the group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. This document speaks as at the date of publication. Save as required by applicable laws and regulations, Severn Trent does not intend to update any forward-looking statements and does not undertake any obligation to do so. Past performance of securities of Severn Trent Plc cannot be relied upon as a guide to the future performance of securities of Severn Trent Plc.

Nothing in this document should be regarded as a profits forecast.

This document is not an offer to sell, exchange or transfer any securities of Severn Trent Plc or any of its subsidiaries and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction. Securities may not be offered, sold or transferred in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act of 1933 (as amended).

 

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