SYDNEY: Tasmea Limited has executed share and unit purchase agreement to acquire 100% of the units and shares in Future Engineering Group (FEG), which includes Future Engineering & Communication Unit Trust (FEC) and its associated entities Future Power Pty Ltd, Rollwell Pty Ltd and Westplant Pty Ltd. Completion is expected to occur on or about 30 August 2024.

Future Engineering Group, established in 1992 and based in Western Australia, specialises in the design, supply, and installation of communication structures and high voltage powerline infrastructure. With a workforce of 139 employees, Future Engineering Group serves a diverse range of customers, including electricity providers, mobile phone carriers, and mining companies across Australia and overseas.

FEG generates its revenue from a long-term and diversified customer base, with 41% of FY2024 revenue derived from its top 10 customers. FEG has achieved a 3-year revenue Compound Annual Growth Rate (CAGR) of circa. 10% and EBIT CAGR of circa. 28% between FY2021 and FY2024, with a strong pipeline and three Master Service Agreements in place underpinning the secured and recurring revenue in FY2025.

The acquisition consideration consists of the following elements:

1) upfront cash payment after purchase price adjustments of A$52.5 million;

2) the issue of A$17.5 million in Tasmea shares (7,000,000 escrowed shares at an issue price of A$2.50 per share, which has been guaranteed at the time the shares are released from escrow following the release of Tasmea’s FY2025 full year audited results); and

3) 37.7% of NPAT generated by FEG for FY2025, FY2026 and FY2027 as an uncapped cash earn-out payment paid on 31 October for the financial year just ended.

The acquisition is expected to be highly earnings per share accretive, delivering approximately 21% EPS accretion, enhancing shareholder value and reflecting the strong financial performance projected under Tasmea’s ownership.

Future Engineering Group (FEG) key management executives have committed to long term employment agreements and will participate in Tasmea long term incentive plan which will enable them to share in the expected electrification trends and growth of the business.

Stephen Young, Managing Director of Tasmea Limited, commented, “We are excited to welcome Future Engineering Group into the Tasmea family. This acquisition is not only a strategic fit but also a significant leap forward for our Company. Rapid electrification trends present a compelling opportunity for Tasmea, and Future Engineering Group’s expertise positions us perfectly to capitalise on these attractive tailwinds in the Australian marketplace.

We foresee extensive synergies with cross-selling opportunities across our subsidiaries enhancing our service offerings and operational efficiencies. This acquisition reinforces our commitment to supporting Australia’s energy transition, investing in industries with strong investment themes and ensuring we remain at the forefront of this transformative phase of energy transition.”

Craig Davies, Managing Director of FEG, “we are very much looking forward to joining the Tasmea Family and working with its Executive Management Team on the many collaboration opportunities we believe exist between our two specialist trade services organisations and our respective customers to realise the growth opportunities for both of our businesses whilst providing value for our customers. We have already lodged a joint tender bid with one of Tasmea’s subsidiaries for one of their existing customers.”

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