Marlowe Regulatory News (MRL)

The information contained within this announcement (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.

21 December 2018

Marlowe plc

Acquisition of William Martin

Placing of new Ordinary Shares to raise £7 million

Marlowe plc ("Marlowe" or the "Group"), the support services group focused on acquiring and developing companies that provide regulated inspection, testing and compliance services for commercial properties, announces that it has acquired William Martin Compliance Solutions Limited and Ivor Roy Limited (together "William Martin") (the "Acquisition") for an implied total enterprise value of £30.0 million.

Formed in 2004, William Martin is a leading technology-enabled UK provider of property-related health and safety audit and consultancy services. It provides recurring consultancy alongside a leading software-as-a-service compliance platform to a wide range of commercial customers across the UK to ensure regulatory compliance in areas such as health & safety, fire safety, water safety, asbestos management and contractor management. The business employs approximately 100 staff and has offices in London, Leeds and Norwich.

Through providing consultancy services integrated with Meridian, its proprietary software platform, William Martin enables customers to manage risk and statutory compliance across their properties. William Martin's services significantly extend Marlowe's capabilities towards providing its customers with a comprehensive approach to their health & safety and regulatory compliance needs, from initial audit through to full implementation, and are expected to generate significant cross-selling opportunities.

For the year to 30 April 2018, William Martin generated revenues of £7.5 million, EBITDA of £2.3 million at a margin of approximately 30%, and profit before tax of £2.4 million. Approximately 85% of William Martin's revenues are recurring. As at period end, the business has net assets of approximately £2.3 million. The Acquisition is expected to be at least 10% earnings enhancing in the first full year of ownership.

The Company also announces a placing to raise gross proceeds of approximately £7 million before expenses through the issue of 1,700,000 new ordinary shares of 50 pence each (the "Placing Shares") at 410 pence per share (the "Issue Price") to certain new and existing investors (the "Placing"). The Placing was oversubscribed and the Issue Price represents a premium of approximately 2.2 per cent to the closing mid-market price of 401 pence per share on Thursday 20 December 2018.

Alex Dacre, Chief Executive of Marlowe Plc, said:

"The acquisition of William Martin significantly accelerates our strategy of providing our customers with a comprehensive one-stop approach to their health & safety and regulatory compliance needs. William Martin is a market leader which shares a similar channel to market with our existing businesses and benefits from strong relationships with customers who place a high value on the consultancy and software services. We are confident that this acquisition will generate attractive returns for Marlowe's shareholders."

For further information:

About Marlowe plc

Marlowe is an AIM-listed company formed to create sustainable shareholder value through the acquisition and development of businesses that provide property regulated inspection, testing and compliance services in the UK. It is focused on health & safety compliance, fire safety, security systems, water treatment and air quality 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.

About the Acquisition

For the year to 30 April 2018, William Martin generated revenues of £7.5 million, EBITDA of £2.3 million at a margin of approximately 30%, and profit before tax of £2.4 million. As at period end, the business has net assets of approximately £2.3 million.

Of the total consideration, £25.0 million is payable in cash on completion, funded from the Group's existing cash resources and revolving credit facility, and approximately £1.5 million shall be satisfied through the issue of 359,454 ordinary shares of 50 pence each in the capital of the Company ("Consideration Shares"). The Consideration Shares are being issued to the vendor who will remain with the Group going forward, and are locked in for a period of two years.

Further deferred cash consideration is payable to the vendor, the value of which shall be determined on the basis of a fixed multiple of EBITDA generated in the financial year prior to the exercise of a put and call mechanism which has been put in place. The put and call mechanism is over 11.6% of the equity of William Martin. The put and call mechanism can be exercised between two and five years from completion. The value of the deferred consideration is expected to be in the range of £3.5-7.0 million and is capped at £20 million for regulatory purposes.

The Placing and Placing Agreement

The Company will raise £7 million in gross proceeds (approximately £6.8 million net of expenses) through the Placing of the Placing Shares at the Issue Price through Cenkos Securities plc ("Cenkos") to provide resources to continue converting the Group's pipeline of smaller bolt-on acquisition. The Placing Shares will be issued under the Company's existing authorities, and the Placing is conditional on the Acquisition.

The Placing is not underwritten. The Placing Agreement contains certain customary warranties and indemnities from the Company in favour of Cenkos and is conditional, inter alia, upon:

a) the Placing Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

b) Admission becoming effective not later than 8.00 a.m. on 28 December 2018 for the Placing Shares.

The Placing Agreement provisions enable Cenkos to terminate the Placing Agreement in certain circumstances prior to Admission (as applicable), including where any warranties are found to be untrue, inaccurate or misleading in any material respect or in the event of a material adverse change in the financial position or prospects of the Group in the context of the Placing or Admission.

Total Voting Rights

Application has been made for the Placing Shares and Consideration Shares to be admitted to trading on AIM, and it is expected that admission will occur at 8.00 a.m. on or around 28 December 2018. Following admission of the Placing Shares and Consideration Shares, the Company's issued ordinary share capital will comprise 40,786,879 ordinary shares, none of which are held in treasury.

Therefore, the total number of ordinary shares with voting rights in the Company will be 40,786,879, which 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.