The consideration for the acquisition, together with management retention payments, is £16.4 million. In addition, the business is being acquired with normalised net debt of £2.4 million. The acquisition is being funded from the Group's existing cash resources.
Based in Warwickshire, Promanex operates across the UK and in Ireland with a workforce of over 800 highly skilled maintenance employees. The company's client base consists largely of such major blue chip customers as Conoco Phillips, EDF, E.ON, Magnox, RWE, Scottish and Southern Energy, Siemens and Total.
The business provides a range of services in the management, operation, maintenance and repair of customers' sites and plant assets, including hard and soft facilities management, water services, such as water treatment and hygiene, civil and industrial services, such as civil engineering, specialist industrial cleaning and outage support, and mechanical & electrical services such as power station materials handling, bi-product systems and emission treatment systems. Approximately 75 per cent of Promanex's revenues are generated from long term contracts and the business has a robust order book and strong pipeline of opportunities.
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For the year ended 30 September 2010, Promanex reported revenue of £56.2 million, EBITDA of £2.4 million and operating profit of £1.8m. Gross assets as at 30 September 2010 were £20.8 million. The acquisition is expected to be earnings enhancing (before amortisation and exceptional costs) in the year ending 31 December 2011 and thereafter.
Promanex will be integrated into Costain's Infrastructure division and the existing management team will remain with the business to ensure a successful integration and continued growth in the business. The acquisition represents a further important step in implementing the 'Choosing Costain' strategy. It broadens the Group's capabilities in ongoing care and maintenance and strengthens the Group's presence in key growth target markets, particularly in Power, Nuclear Process, Hydrocarbons & Chemicals and Water, where significant investment is required in order to meet national needs. The combination of Costain's existing consulting, project delivery and maintenance capability, together with Promanex's operations and maintenance services, significantly enhances the Group's ability to offer full lifecycle services to customers in these target markets.
Andrew Wyllie, Chief Executive of Costain, said: "We are delighted to have completed the acquisition of Promanex, which represents a further important step in the implementation of our strategy of broadening our existing front-end consultancy and care and maintenance operations in order to meet customers' requirements. The acquisition will significantly enhance our existing ability to provide operations and maintenance support services to our major customers and reinforces Costain's position as a leading Tier One engineering solutions provider."
