INVESTMENT IN BIOGEN

RNS Number : 0941J

Kier Group PLC

02 August 2012

 



KIER GROUP PLC

INVESTMENT IN BIOGEN

Kier announces that it has today completed its investment in Biogen (UK) Limited ("Biogen"), establishing a 50/50 joint venture with the owner of Bedfordia Group plc ("Bedfordia").

Headquartered in Bedfordshire, Biogen designs, builds and operates large-scale anaerobic digestion ("AD") plants to process food waste and produce renewable energy.

Kier's maximum total investment is £24.375 million (comprising a mixture of preferred and ordinary equity), of which £5.375 million was invested on completion. A further £2.5 million of equity will be invested in December 2012 and another £2.5 million in July 2013. The remaining £14 million is scheduled to be invested in instalments over the next four years to finance new AD plants.

Biogen, which was established by Bedfordia in 2005, currently owns and operates two large commercial AD plants in the UK (both of which are included in the joint venture) and, in conjunction with Kier, plans to build a number of further plants in strategic locations to serve the requirements of local authorities, food retailers, food manufacturers and commercial waste providers to the food and retail industries. 

The joint venture will enhance Kier's environmental business by providing intelligent solutions for the treatment of food waste and complements the Pure recycling business which Kier acquired in 2010.

Biogen's existing management and operational team, including its Chief Executive, will remain with the business. The management team has been granted options over Biogen's shares which are intended to ensure their continued long-term involvement in the business.

As at 30 June 2012, Biogen had gross assets of £15 million.  For the year ended 31 December 2011, Biogen made a loss before tax of £1.7 million following significant investment in business development and R&D. Biogen's EBITDA for the year was £0.1 million.  There is significant demand for new AD plants across the UK, with 7 million tonnes of food waste being produced per annum and current AD capacity of only 2.5 million tonnes, resulting in a need for a further 100 plants.  Following an initial investment phase, Kier expects the return on capital to exceed 15 per cent. and for the business to be operating nine plants by 2017.

Paul Sheffield, Chief Executive of Kier Group plc, commented: "We are delighted to have made the investment in Biogen, which again demonstrates Kier's strategy of developing intelligent solutions for our clients and also our commitment to the green agenda.  We see significant potential in an attractive market for the development of the business in the coming years."

John Ibbett, Chairman of Bedfordia Group plc, commented: "We are very happy to be working with Kier, which shares Biogen's strong company values. Part of Biogen's long-term strategy has been to identify a partner with which we can develop the proven commercial viability of our own AD technology.  The joint venture will now be able to expand its network of plants across the UK, making clean green energy from food waste available to more end-users."

Ends

Contacts

Paul Sheffield, Chief Executive, Kier Group                                  01767 640 111

Faeth Birch, RLM Finsbury                                                         020 7251 3801

 

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