HVAC installer Worthington Nicholls plans to float on AIM and raise up to £15 million

(25/05/2006)

Worthington Nicholls Group plc , the UK's largest independent installer of air conditioning, heating, ventilation and chilled water systems, has announced its intention to seek admission to trading on AIM by way of a Placing of new Ordinary Shares. The Company anticipates that dealings in its existing and new Ordinary Shares will commence in early April 2006.

The growth of the HVAC market is being driven by new European Union legislation on refrigerant gases, which will require approximately 80% of HVAC systems across Europe to be replaced by the end of 2009.

The Company intends to raise up to £15 million to fund the organic and acquisitive growth of the business, both in the UK and Europe. The market capitalisation of the Company on admission to AIM is expected to be in the range of £30-35 million. Corporate Synergy is acting as Nominated Adviser and Broker to the Company.

The business was established in 1973 and has grown to be one of the dominant players in the UK Heating, Ventilation and Air Conditioning (“HVAC”) market, which is currently estimated to be worth approximately £2 billion per annum.

In 2003 the Company repositioned itself as a support services group, moving away from the subcontractor business model common across the HVAC industry. The Company now offers a full project management capability, which includes survey, design and specification, through installation, commissioning and ongoing service and maintenance.

Worthington Nicholls has formed a partnership with Daikin, a leading manufacturer and supplier of one of the largest ranges of air conditioning equipment in the world.

The transition to full service capability has resulted in an increasing number of large-scale and sole supplier contracts. These have delivered sales and margin growth and improved earnings visibility. The Group generated turnover of £11.7 million for the year ended 30 September 2005, with a pre-tax profit of £1.6 million and has already secured approximately £26 million of sales for 2006/2007.

Worthington Nicholls’s blue-chip clients include Hilton Hotels, Holiday Inn Hotels, Debenhams, Boots the Chemist, Arcadia and McDonald’s.

Worthington Nicholls operates from its head office in Manchester and regional offices in Bedford, Swindon and Edinburgh, and employs approximately 130 people.

The Placing:

· Worthington Nicholls plans to raise up to £15 million by way of a Placing of new Ordinary Shares to institutional investors.

· The net proceeds of the Placing will be used to provide working capital for continued organic expansion of the business and to fund acquisitions in both the UK and European markets, in order to meet the demands of its growing customer base for sole supplier contracts across European operations.

· A proportion of the funds raised will also be used to provide a partial equity exit for the Chairman.

· The market capitalisation of the Company on admission to AIM is expected to be in the range of £30-35 million.

· Corporate Synergy is acting as Nominated Adviser and Broker to the Company.

Commenting on this announcement, Mark Worthington, Chief Executive of Worthington Nicholls, said: “We have a tremendous opportunity to expand our business. Our market has changed a lot over the years, including much more stringent environmental legislation. As such, the large international hotel and restaurant groups now prefer to deal with a single supplier and one that shares their very high standards of professionalism. Our customers would welcome our ability to expand by acquisition so we can further roll out our services in the UK and Europe.”

Related categories:  Air conditioning - light commercial   Air conditioning - residential   Mergers & acquisitions 

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