The Environmental Group Limited (ASX: EGL) supplies gas and vapour emission control systems, water treatment systems and services in the field of engineering to a variety of industries. The Company provides flaring systems for disposal of gases from offshore rigs and plants, offers low emission burners and combustion systems, water treatment and purification and other environmental control services.
The company has recently disclosed on ASX, the details regarding the acquisition of RCR Energy Service Assets. A snippet briefing the critical highlights is stated below:
- Purchase to be funded through existing bank facilities.
- The acquisition would enable the company to have a presence in every state.
- A step in the strategy to build Bio/Waste to Energy capability.
- The acquisition adds to and complements EGL’s existing subsidiaries –Baltec IES, TAPC & EGL Water.
- The existing senior management team has been retained.
- The purchase is expected to get completed during the first half of the month of January 2019.
Further to the announcement of 7th and 25th January 2019 regarding the purchase and subsequent settlement of the acquisition of the assets of RCR Energy Service from the Administrators of RCR Tomlinson Limited, the Board of The Environmental Group Limited (ASX: EGL) is now able to provide further details of this transaction.
The purchase of RCR Energy Services’ business assets was achieved through a cash payment of $3m, representing an acquisition multiple of approximately two times 2018 EBIT. The purchase includes fixed assets, inventory and employee liabilities. EGL was able to secure the ongoing employment of all current Energy Service staff including State and National managers who transferred seamlessly to EGL. The Business is now operating as Tomlinson Energy Service, wholly owned by EGL.
The Tomlinson Energy Division is expected to contribute to the revenue and profits of EGL positively. Importantly, the Division will provide EGL with a stable revenue stream given the ongoing, repeat nature of the division’s projects and maintenance work.
The successful purchase of Tomlinson Energy Division was in line with EGL’s growth strategy and the acquisition strategy as set out in the 2017 and 2018 Annual Reports and outlined at the November 2018 Annual General Meeting. EGL will continue to actively consider new growth and acquisition opportunities that fit our environmental platform. EGL strategically aims to provide existing and new shareholders with further benefits from their investment in The Environmental Group Ltd; a company committed to reducing pollution and improving the effective use of world resources.
EGL was advised on the acquisition by Lion Advisory and Baker Jones Lawyers.
Now let us quickly have a look at the company’s stock performance and the return it has posted over the last few months. The stock last traded at a price of $0.045, with a market capitalisation of $9.79 million. The stock has yielded a Year Till Date returns of 28.57% and posted returns of -15.09%, -6.25% & 28.57% over the past six months, three months & one-month period respectively. It had a 52-week high price of $0.076, with an average volume of 152,811 approximately.
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