Acquisition of DCUK & £10m Fundraise

July 13th 2017

Marlowe plc ("Marlowe", the "Company" or the "Group"), the support services group focused on acquiring and developing companies that provide critical asset maintenance services, announces that it has agreed to acquire Ductclean (UK) Limited ("DCUK") for a total enterprise value of up to £10.0 million (the "Acquisition").

DCUK is a UK market leader in ventilation maintenance, ductwork cleaning and management, kitchen extract cleaning and contamination remediation services, including asbestos remediation. Established in 1998 and operating nationally from headquarters in Welwyn Garden City, Hertfordshire, the business employs around 185 people. DCUK's key customers include national hotel and leisure providers, airports, NHS trusts, universities, local authorities, and FTSE companies.

The acquisition of DCUK represents Marlowe's first step into the air hygiene market, where it will form the basis of a new division to sit alongside the Group's existing activities in fire & security and water treatment. The Board believes that the air hygiene market shares attractive key characteristics with the fire & security and water treatment markets, including a significant element of non-discretionary spend, strong regulatory and legislative drivers, a degree of operational and technical complexity which favours outsourcing, and the same channel to market, which provides opportunities for cross-selling. In addition to providing the Group with a presence in a new complementary service sector, the market in which DCUK operates is currently highly fragmented and offers significant scope for consolidation.

For the year ended 30 September 2016, DCUK reported revenues of £16.7 million, underlying EBITDA of £1.8 million (adjusted for non-recurring items) and gross assets of £6.0 million, including freehold property which has been independently valued at £1.5 million. The Directors believe that the Acquisition will immediately enhance Group earnings.

The Acquisition of DCUK includes cash consideration of £4.0 million which will be used in part to repay debt of approximately £2 million. In addition Marlowe will issue of 878,031 new ordinary shares of 50 pence each (the "Consideration Shares") at 393.88 pence per share, representing an aggregate value of approximately £3.5 million, to the DCUK management team who will lead Marlowe's new Air Hygiene division. The Consideration Shares are subject to a lock-up period of up to 60 months with orderly market conditions attached after this period. An additional earn-out is payable of up to £2.5 million, which can be settled in cash or ordinary shares at the Company's option. The earn-out shares would be issued at the market price at the time of issue and subject to the same lock-in period.

In addition, the Company today announces a Placing that was oversubscribed, with new and existing institutional shareholders, to raise approximately £10 million. The proceeds of the Placing, along with the Company's existing £18 million debt facilities, will be used to fund the cash consideration for DCUK and to support the Company's plans for further acquisition-led growth. The Company has approximately £17 million of net headroom under its current debt facilities.

The Placing Proceeds, as well as the issue of the Consideration Shares, will be subject to approval by the Company's shareholders at the General Meeting (the "GM") to be held on 28 July 2017. The Company will apply for admission of 2,597,402 Placing Shares and 878,031 Consideration Shares to trading on AIM that are subject to shareholder approval at the GM and it is expected that admission will occur on 31 July 2017.

The Circular which sets out the details of the Placing and Consideration Shares, and of the Resolutions to be proposed at the GM, is expected to be posted to shareholders today. The Circular will also be available on the Company's website at: www.marloweplc.com. Capitalised terms used, but not defined in this announcement shall have the same meaning as set out in the Circular.

Following admission of the Placing and Consideration Shares, the Company's issued ordinary share capital will consist of 34,392,428 ordinary shares; no shares are held in treasury. The above figure of 34,392,428 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure Guidance and Transparency Rules.

 

Alex Dacre, Chief Executive of Marlowe plc, commented: 

"The acquisition of DCUK significantly extends the scope of the Group's activities into a new complementary service sector with strong recurring revenues and where growth is driven by stringent health and safety regulation. The air hygiene market is currently highly fragmented and this will provide Marlowe with increased acquisition-led growth opportunities alongside our existing Fire & Security and Water Treatment businesses. We look forward to DCUK joining the Group and to the substantial contribution that it will make to the continued development of Marlowe into the UK's leading provider of critical asset maintenance services."

 

For further information:

Marlowe plc

www.marloweplc.com

Alex Dacre, Chief Executive

Tel: +44 (0) 203 813 8498

 

IR@marloweplc.com

Cenkos Securities plc (Nominated Adviser and Broker)

Nicholas Wells

Elizabeth Bowman

Tel: +44 (0)20 7397 8900


FTI Consulting

Nick Hasell

Tel: +44 (0)20 3727 1340

Alex Le May

 

About Marlowe plc

Marlowe is an AIM-listed company formed to create sustainable shareholder value through the acquisition and development of businesses that provide critical asset maintenance services in the UK.  It is focused on fire protection, security systems, water treatment and air hygiene services - which are essential to its customers' operations and invariably governed by regulation, and where customers require a single specialist outsourced provider with nationwide coverage. Our customers can be found on most high streets, in office complexes and industrial estates, and include SMEs, local authorities, facilities management providers, multi-site NHS trusts and FTSE 100 companies.

The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.