Restore Regulatory News (RST)

27 Mar 2007 07:02

Mavinwood PLC27 March 2007 Mavinwood plc ("Mavinwood") Acquisition of Document Control Services Limited ("DCS") Payment of up to £8.3 million including discharge of indebtedness and contingent consideration Mavinwood plc (AIM: MVW), the support services company, announces that it hasagreed to purchase the entire issued share capital of Stapledon Holdings Limited("Stapledon''), the parent company of DCS, a provider of scanning and indexingservices to a range of customers primarily in the infrastructure, oil & gas andlocal government sectors. DCS is based in Peterborough and provides a nationalservice. Following completion, the existing management of DCS will continue torun the business. The initial consideration for the acquisition of £1.3 million will be satisfiedas to £0.3 million in cash and £1 million by the issue of 5,405,405 ordinaryshares in the capital of Mavinwood (the "Consideration Shares"). Application hasbeen made for the Consideration Shares to be admitted to trading on AIM, whichis expected to take place on 2 April 2007. In addition, Mavinwood will procurethe discharge by Stapledon and DCS ("DCS Group'') of indebtedness amounting to£5.0 million. Debt funding for the acquisition was provided by the existingbanking group of Allied Irish Banks, p.l.c and Fortis Bank SA/NV. Contingent consideration up to a maximum £2 million will also be paid dependenton the performance of DCS. The contingent consideration is payable in cash orloan notes on the basis of £6.51 of additional consideration for each £1 ofEBITA in excess of £923,000 (up to a maximum EBITA of £1,230,000) to be achievedby DCS during the year ending 30 June 2008. In the year ended 30 June 2006, the DCS Group made a consolidated profit beforetax of £71,000 on turnover of £3,289,000. The DCS Group incurred interest of£467,000 in the year ended 30 June 2006 and £226,000 in relation to goodwillamortisation and £76,000 in relation to holding company costs, which are notexpected by the Directors of Mavinwood to be recurring costs. The Directors ofMavinwood therefore consider that the earnings before interest, tax andamortisation, normalised for non-recurring costs, of the DCS Group for the yearended 30 June 2006 were £840,000. At 30 June 2006, the DCS Group had consolidated net liabilities of £1,051,000after £5,051,000 of bank and other funding. The acquisition is expected to be earnings enhancing for Mavinwood in thecurrent financial year. Kevin Mahoney, Chief Executive of Mavinwood, commented:"We have been keen to add a scanning and digitisation capability to our verysuccessful document handling businesses, Restore and Wansdyke. DCS is asuccessful and profitable business with quality clients and I am delighted thatall of the senior management team are staying with the operation. Over the last two years we have built Mavinwood into a growing support servicesgroup with strong positions in both our chosen markets, document handling andemergency repair. DCS, our sixth large acquisition since we launched as a cashshell, continues our record of acquiring businesses with good management andtrack records of profitable growth." Enquiries:Mavinwood plcKevin Mahoney 020 7661 9650Mike Vincent 020 7661 9651 Collins Stewart Europe LimitedAdrian Hadden 020 7523 8350 Threadneedle CommunicationsJohn Coles 020 7936 9604 Background on Mavinwood Mavinwood was launched on AIM on 5 November 2004 and is pursuing a buy and buildstrategy in the support services sector. The strategy is to acquire and developsupport services businesses which have the potential for growth, eitherorganically or in combination with other complementary businesses. The focus ison the emergency repair (especially where there is an insured repair) anddocument handling sectors. This information is provided by RNS The company news service from the London Stock Exchange