Renold Regulatory News (RNO)

1 September 2023

Renold plc

("Renold", the "Company" or the "Group")

Acquisition of Davidson Chain PTY

Renold, a leading international supplier of industrial chains and related power transmission products, is pleased to announce that it has acquired the trading assets of Davidson Chain PTY ("Davidson") for a total cash consideration of AU$6 million (the "Acquisition").

Highlights

· Established in Melbourne, Australia, in 1991, Davidson is a family owned manufacturer and distributor of high-quality conveyor chain ("CVC").

· The Acquisition increases the Group's access to the Australian CVC market, building on Renold's existing strong market position.

· Opportunities exist for significant manufacturing synergies between Davidson and Renold's current Australian operations.

· The Davidson management team have transferred to the Group, bringing with them a wealth of industry experience and market knowledge, and will continue to lead the Davidson business, joining Renold's Australasian management team.

· The Acquisition is expected to immediately enhance Group earnings per share, and be accretive to the Group's operating margin.

· ROIC is expected to be in line with management's targets, and above Renold's weighted average cost of capital in the first year of ownership.

The Acquisition and financial considerations

Davidson was acquired on a cash free, debt free basis, for a total cash consideration of AU$6 million.

The Acquisition consideration represents a multiple of approximately 5.9x Davidson's June LTM EBITDA. There are a number of identified synergy benefits, the effect of which is expected to reduce the multiple to below 5.0x in the short term.

The Acquisition is funded from the Group's existing borrowing facilities. As at 31 March 2023, the Group's net debt to EBITDA multiple was 0.8x and following completion of the Acquisition remains broadly similar. The Group remains well placed, with sufficient borrowing headroom, to execute on further bolt-on acquisition opportunities from an identified pipeline of targets.

Davidson delivered revenue of AU$4.2 million for the 12 months to June 2023, generating an EBITDA of AU$ 1.1 million.

Commenting on the Acquisition, Robert Purcell, Group Chief Executive of Renold plc, said:

"The Davidson acquisition demonstrates further strategic momentum, supplementing organic growth through high quality bolt-on acquisitions which can expand our geographic presence, grow our product offering and strengthen our market position in key end markets.

"We are delighted that Davidson has joined the Renold Group, and believe that not only have we acquired an excellent business, but also retained the services of a very experienced team. The Davidson business is very much aligned with Renold, including an excellent long-established track record of manufacturing and supplying high quality chain products with an entrepreneurial culture that will fit well with our own.

"We welcome the Davidson team to Renold."

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NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well-deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.

Further information about Renold can be found on the website at: www.renold.com