Renew Holdings Regulatory News (RNWH)

2 February 2011

Renew Holdings plc ("Renew" or the "Group")

Proposed acquisition of Amco Group Holdings Limited ('Amco')

and re-admission to AIM.

Introduction

Renew is pleased to announce that it has reached an agreement (subject to shareholder approval) to purchase the entire issued share capital of Amco for a cash consideration of £19.8 million. The Acquisition will be funded with a new £15 million term loan provided by HSBC Bank plc and out of existing cash resources. In addition to this amount, Renew will pay the Vendors compensation for lock-box profits of £0.9 million and deferred consideration of £6.2 million. Both the lock-box profits compensation and the deferred consideration are entirely self-funding and do not represent a further cash funding requirement for Renew.

Highlights

·; The acquisition of Amco is firmly in line with the Group's stated strategy of growing its Specialist Engineering business.

·; As a result of the Acquisition, in excess of 50 per cent. of the revenue of the Enlarged Group will be derived from Specialist Engineering.

·; Amco is a specialist engineering company operating in the rail, energy, and engineering markets. The company provides an integrated service from feasibility, budget and design through to installation, commissioning and maintenance.

·; Amco's revenue and operating profit for the 9 month period ended 30 September 2010 was £59.8m and £4.2m respectively.

·; The Acquisition is being funded entirely out of existing cash resources and a new debt facility provided by HSBC Bank plc.

Commenting on the Acquisition, Brian May, Chief Executive of Renew said:

"We are delighted to welcome the staff and management of Amco to the Renew group. The acquisition of Amco allows Renew to increase and broaden the scale of its specialist engineering operations, as well as adding to the range of services we can provide to our customers. Amco has a strong and highly experienced management team and I look forward to working with them in the future."

An admission document ("Admission Document") containing notice of the General Meeting at which Shareholders will be asked to approve the Acquisition is being posted today.

Nothing in this announcement is intended to be a profit forecast and the statements in this announcement should not be interpreted to mean that the earnings per share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial period.

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Further Information

Information on Amco

Amco is a specialist engineering company operating in the rail and energy markets. The company provides an integrated service from feasibility, budget and design through to installation, commissioning and maintenance.

The business delivers through dedicated, service-focused business units retaining the specialist skills required for the particular needs of the sectors in which it operates.

Formed in 1970, operating under the name of Amco Construction Limited, Amco was originally an underground contractor in the UK coal industry, working on tunnelling, roadways and shafts. As the UK coal industry diminished in the 1980s and 1990s, emphasis shifted to new markets. From the early part of this century, Amco has worked primarily in the rail and engineering sectors (civil, mechanical and electrical) with an emerging energy business developed through its engineering operations.

By 2008, following a management buyout, Amco was established as a multi-discipline specialist engineering company operating in the rail, energy and engineering markets and serving a growing client base across both the public and private sectors. Amco's business activities are focused on markets and services where it can continue the profitable growth profile achieved over recent years and are balanced between asset creation, renewal and maintenance.

Amco continues to focus on securing long term frameworks with customers including Network Rail Infrastructure Limited, Magnox Electric Limited, E.ON UK plc, Scottish Power Limited, Scottish and Southern Energy PLC and The Environment Agency. Current business activities are now focused on the rail sector, which accounts for approximately 52 per cent. of turnover, and the energy & engineering sector which accounts for the balance.

Amco's revenue and operating profit for the 9 month period ended 30 September 2010 were £59.8m and £4.2m respectively.

Terms of the Acquisition

Pursuant to the terms of the Acquisition, the Company will acquire the entire issued ordinary share capital of Amco for £26.9 million comprising (i) initial consideration of £19.8 million plus (ii) compensation for locked box profits of £0.9 million and (iii) deferred consideration of £6.2 million. The initial consideration and compensation for locked box profits will be funded by £15 million of new bank debt and £5.7 million of existing Renew cash reserves. The deferred consideration will be funded by the payment to the Amco shareholders upon receipt by Amco of £4.6 million owed to Amco by other companies owned by the Vendors and the transfer of an Amco Group property valued at £1.6 million to another company owned by the Vendors.

Strategy of the Enlarged Group

It is the Board's intention to continue with the strategy of seeking to increase revenue in Specialist Engineering both organically and by acquisition. In Specialist Engineering, the Group seeks to exploit its specialist skills in a range of industries which offer sustainable earnings opportunities and have high barriers to entry.

In Specialist Building, the Group's focus will remain on selectively accessing opportunities in targeted markets where the Group has knowledge and experience both of its clients and of similar projects.

The composition of the Renew board will remain unchanged as a result of the Acquisition.

Benefits of the Acquisition for Shareholders

The Directors believe that the activities of Renew and Amco are complementary and that the Acquisition will be earnings enhancing for Shareholders. Furthermore, the Directors believe that:

● Amco operates as a specialist engineering business primarily in the rail and energy markets. Renew is already present in both of these markets and the acquisition of Amco will enable Renew to increase and broaden the scale of its operations, as well as adding to the range of services that the Enlarged Group can provide to its customers.

● Amco's activities in each of the rail and energy markets do not compete with the current activities of Renew.

● Historically, the margins earned by Amco have been higher than the average margins earned by Renew and the Board expects that the Acquisition will lead to an increase in the average margins achieved.

● Amco has historically not required material cash for either working capital or capital expenditure requirements. As a result, the Board expects that the activities of the Enlarged Group will be cash generative.

● The acquisition of Amco is firmly in line with the Group's stated strategy of growing its Specialist Engineering business. As a result of the Acquisition, in excess of 50 per cent. of revenue of the Enlarged Group will be derived from Specialist Engineering.

● The Acquisition will enable Renew to deploy part of its available cash reserves into an earnings enhancing acquisition.

Recommendation

The Directors of Renew believe that the Acquisition will complement and enhance the Company's existing Specialist Engineering activities and overall reported operating margin; and is also in line with the Board's established strategy of growing the Company's Specialist Engineering business.

The Directors consider that the Acquisition is in the best interests of Renew and Shareholders as a whole. Accordingly, the Directors recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings, amounting, in aggregate, to 635,000 Ordinary Shares, representing approximately 1.1 per cent. of the Existing Ordinary Shares.

Current Trading and Financial Information

On 23 November 2010 the Group published its preliminary results for the year ended 30 September 2010. On 26 January 2011, the Group released an AGM statement giving an update on current trading.

Dividend Policy

The Group has a progressive dividend policy and has maintained a dividend of 3p per share for the last three years. The Board intends to continue to pursue this policy, subject to the Group's future profitability and cash resources.

Cancellation and Re-Admission to AIM

In view of the size of Amco in relation to the Company, under Rule 14 of the AIM Rules, the Acquisition will constitute a reverse takeover for the Company and, accordingly, it is conditional on the approval of Shareholders. Such approval is being sought at the General Meeting to be held on Wednesday 23 February 2011, notice of which is set out in the Admission Document posted to Shareholders today.

If the Resolution to acquire Amco is duly passed at the General Meeting, the admission of the Company's Ordinary Shares to trading on AIM will be cancelled (immediately prior to Admission) and the Ordinary Shares will be re-admitted to trading on AIM. Admission of the Ordinary Shares to trading on AIM is expected to take place on or around 25 February 2011.

Irrevocable undertakings

Renew has received irrevocable undertakings to vote in favour of the Resolution at the General Meeting from those Directors who hold Ordinary Shares in respect of their entire holdings of Ordinary Shares, amounting, in aggregate, to 635,000 Ordinary Shares and representing approximately 1.1 per cent. of the Existing Ordinary Shares.

In addition, Renew has received an irrevocable undertaking to vote in favour of the Resolution at the General Meeting from Gartmore Investment Limited in respect of 10,055,222 Ordinary Shares and representing approximately 16.8 per cent. of the Existing Ordinary Shares.

Accordingly, in total, Renew has received irrevocable undertakings to vote in favour of the Resolution at the General Meeting from Shareholders in respect of 10,690,222 Ordinary Shares and representing approximately 17.85 per cent. of the Existing Ordinary Shares.

Further details of the irrevocable undertakings received are set out in the Admission Document posted to Shareholders today.

General Meeting

The General Meeting has been convened for 10 a.m. on 23 February 2011 at the offices of DLA Piper UK LLP, Princes Exchange, Princes Square Leeds LS1 4BY, notice of which is set out in the Admission document posted to Shareholders today.

Definitions

All terms used in this document are consistent with those defined in the Admission Document being sent to Shareholders today.

Expected Timetable of Principle Events

● Last time and date for lodging of Forms of Proxy for the General Meeting 10 a.m. on 21 February 2011.

● General Meeting 10 a.m. on 23 February 2011.

● Completion of Acquisition 24 February 2011.

● Re-Admission effective and dealings in the Ordinary Shares expected to commence on AIM 25 February 2011.

Ends