Marlowe Regulatory News (MRL)

4 October 2021

Marlowe plc

Acquisitions of VinciWorks Legal Ltd and Hydro-X Group Ltd

Marlowe plc ("Marlowe" or the "Group"), the UK leader in business-critical services and software which assure safety and regulatory compliance, announces two acquisitions across its Governance Risk & Compliance (GRC) and Testing, Inspection & Certification (TIC) divisions for a combined consideration of up to £84 million.

Consistent with its clearly defined strategy focused on regulated compliance service and software sectors, Marlowe is significantly advancing its Digital offering by acquiring Vinci Legal Ltd ("VinciWorks"), the UK's leading regulatory compliance eLearning and software solution, whilst progressing its Deepen strategy by acquiring Hydro-X Group Ltd (together with its subsidiaries, "Hydro-X"), a leading water treatment and air hygiene business.

The acquisitions of VinciWorks and Hydro-X broaden Marlowe's end-to-end compliance software offering within GRC and deepen Marlowe's leading presence within existing TIC markets. Following the completion of both acquisitions, Group run-rate revenues are expected to be approximately £325 million and run-rate adjusted EBITDA is expected to be approximately £57 million. The consideration for both acquisitions is to be funded from cash and debt resources.

VinciWorks

Marlowe has acquired eLearning and compliance software VinciWorks for an initial consideration of £39 million payable in cash on completion and a contingent consideration estimated to be in the region of £15 million.

Headquartered in the UK, VinciWorks provides compliance eLearning software as a service (SaaS) and compliance management software to clients across a broad range of sectors. It has a strong market share in the legal, professional services and larger corporate sectors. VinciWorks further expands Marlowe's SaaS subscription revenue and offers cross-selling opportunities with the Group's GRC division's existing eLearning and compliance software business lines.

VinciWorks' subscription-based eLearning courses enable clients to implement compliance and ESG training across areas such as GDPR, anti-bribery, anti-money laundering, cyber-security, tax evasion, modern slavery, code of conduct and health & safety. Its Omnitrack software is a fully integrated SaaS compliance and risk management product which complements compliance eLearning by enabling clients to collect, analyse and report data across a broad range of enterprise-wide compliance issues.

Founded in 2003, VinciWorks has 31 employees and operations in both the UK and Israel, with 95% of revenues derived from the UK. With more than 95% of its revenue being generated from SaaS subscriptions, VinciWorks serves c.530 clients, including 60 of the UK's top 100 law firms and its platform is used by its clients across their locations in 30 different countries.

On a run-rate basis, the business generates £5.5 million of revenue and an adjusted EBITDA of £3.2 million, representing a 58% adjusted EBITDA margin. In the year to 31 August 2021, the business generated £5.3 million of revenue and an adjusted EBITDA of £2.7 million. As at 31 August 2021, VinciWorks had net assets of £1.4 million. The estimated contingent consideration payable in connection with the acquisition of VinciWorks of c.£15 million is based on VinciWorks achieving FY23 EBITDA of £5.1 million.

Hydro-X

Marlowe has exchanged contracts to acquire Hydro-X for a cash consideration of £30 million, payable on completion. The acquisition of Hydro-X is expected to complete by 21 October 2021.

Founded in 1984, Hydro-X is based in Sheffield and employs approximately 180 staff. The business is well-positioned in structural growth markets, providing a broad range of technical compliance services focused on water & air compliance, water treatment, fire safety and health & safety. The business is complementary to, and provides a number of attractive synergies with, Marlowe's TIC division. These synergies include cross-selling opportunities as well as a number of scale efficiencies, such as enhanced operational route density and the benefits from using Marlowe's existing sales, operational and back-office platforms.

In the year to 31 August 2021, Hydro-X generated revenue of £17.6 million and an adjusted EBITDA of £3.5 million, representing a 20% EBITDA margin. Hydro-X net assets as at 31 August 2021 were £5.3 million.

Alex Dacre, Chief Executive of Marlowe plc, said:

"Together, the acquisitions of VinciWorks and Hydro-X form a major step in delivering on the strategy announced at our Capital Markets Day, deepening our market share in attractive regulated TIC markets and significantly developing our digital proposition. VinciWorks advances our goal of becoming the market leader in governance, risk and compliance software and cements our position as the UK's leading GRC compliance eLearning business, whilst Hydro-X majorly contributes to our safety and compliance services in our TIC division, offering significant synergies with WCS Group. Whether via software or services, Marlowe is committed to becoming the one-stop shop for customers' safety and regulatory compliance needs."

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About Marlowe plc

Marlowe is a UK leader in business-critical services and software which assure safety and regulatory compliance. The company was formed to create sustainable shareholder value through the acquisition and development of businesses that provide regulated safety and compliance services and software. It is focused on compliance software, eLearning, health & safety, employment law & HR compliance, fire safety & security, water & air hygiene and occupational health services - all of which are vital to the wellbeing of its customers operations and are invariably governed by regulation. Marlowe currently provides software to over 1 million users and services to over 25% of Britain's commercial premises. The Group provides customers with a single outsourced, nationwide, provider of a range of regulated compliance and safety solutions. Our customers can be found in office complexes, high streets & leisure facilities, manufacturing plants and industrial estates, and include thousands of SMEs, local authorities, facilities management providers, multi-site NHS trusts and FTSE 100 companies.

Certain of the information contained within this announcement is deemed by the Company to constitute inside information as stipulated under The Market Abuse Regulation (EU 596/2014) pursuant to the Market Abuse (Amendment) (EU Exit) Regulations 2018. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.