The Sureserve Group is pleased to announce the acquisition of the entire share capital of Orchard (Holdings) UK Ltd (“Orchard”) for an initial cash consideration of £7.0m. Orchard is a leading UK energy broker and energy management services provider and the acquisition further expands the Group’s Energy Services division’s broad, nationwide offering.
Orchard provides advice to corporate clients in relation to managing their energy costs, particularly energy procurement and usage. In addition, Orchard provides energy management services to commercial and industrial customers, including brokering supply with utilities firms, managing contracts and advising on energy consumption. Orchard has strong commercial relationships with the leading UK utilities providers. The business employs 78 staff and is based in Elland, West Yorkshire, with offices in Glasgow, Bristol, Newcastle and Northampton.
Orchard was founded in 2004 and, prior to its acquisition by the Group, was principally owned by Gareth and Rachel Henderson. Following completion of the acquisition, Gareth Henderson and the management team will remain with the business. As a result of the transaction, Lakehouse’s total headcount will rise to approximately 1,400.
The acquisition of Orchard will enhance the Group’s existing offering to social housing clients in addressing the challenge of fuel poverty. The Government’s fuel poverty strategy for England (March 2015) has set a target of achieving an energy efficiency standard of B and C for as many fuel poor homes as reasonably practicable by 2030. The Group’s Energy Services division currently combines insulation and thermal efficiency services, renewable technology expertise and a smart metering specialism and the acquisition of Orchard extends this service offering to support clients in enhancing the effectiveness of their energy procurement and usage.
The acquisition represents a further step in the Group’s growth strategy as the Group continues to expand and develop through targeted, complementary acquisitions which broaden its service offering and geographical reach. Bringing Orchard into the Group provides further opportunities for the cross-selling of services, opening up the Group’s existing offering to Orchard’s commercial customers and enabling the introduction of energy brokerage services to the Group’s large housing association and local authority customers.
In the financial year ended 31 August 2014, Orchard reported a turnover from continuing activities of £4.99 million and profit before tax of £0.88 million. Orchard had gross assets of £5.9 million as at 31 August 2014. Given anticipated near-term integration costs of the business, together with investment in systems and mobilising new activities, the Group expects the acquisition to be earnings neutral in its first year.
Under the terms of the acquisition, the consideration comprises an initial amount payable in cash on completion of £7.0 million and a further deferred consideration of up to £3.0 million, payable on the basis of Orchard’s financial performance in period up to 30 September 2017.
Stuart Black, Executive Chairman of Lakehouse, said:
“Following our successful initial public offering earlier this year, this acquisition further endorses our strategy of acquiring and integrating businesses which expand our service offering and geographical reach. Orchard’s strong client base, excellent relationships with utilities firms and market-leading customer service open up new opportunities for growth in the energy services market.
“Bringing together energy efficiency, water management and smart metering expertise alongside Orchard’s brokering service, the Group’s Energy Services division offers an increasingly broad, national proposition to clients looking to manage their energy usage and meet challenging carbon savings targets.”
Gareth Henderson, founder and Managing Director of Orchard, said:
“We are delighted to be joining the Group and supporting the continued growth of the businesses. Becoming part of the Group allows us to offer an extended range of services to our existing customer base, as well as strengthening our mutual relationships with the major utilities firms. This leaves us well placed to build on our exceptional customer service record and to keep helping customers manage their energy costs.”
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