Marlowe PLC – MRL – Final Results

Marlowe PLC – MRL – Final Results

Marlowe plc ("Marlowe", the "Group" or the "Company"), the UK leader in business-critical services and software which assure safety and regulatory complianceannounces its preliminary results for the year ended 31 March 2021 ("FY2021").

Financial performance


Continuing operations












Divisional EBITDA margin




Cash from operating activities




Operating profit2




Profit before tax2




Earnings per share - basic2




Net cash/(debt) 3




Continuing operations






Operating profit



(Loss)/profit before tax



Earnings per share - basic



Net cash/(debt)





* Preliminary results, subject to audit

** Excluding non-core air quality activities disposed of in March 2020

1 Earnings before interest, taxes, depreciation and amortisation ("EBITDA")

Explanation of non-IFRS measures are contained within the Finance Director's review below

3 Excluding IFRS 16 lease liabilities


Financial highlights


·       Resilient platform for growthGroup revenue* up 15% to £192.0 million. Current 12-month run rate revenues of approximately £280 million with c.83% recurring in nature

·       Adjusted EBITDA1,2 up 30% to £28.7 million and run rate adjusted EBITDA1,2 of c.£44 million

·       Adjusted profit before tax2 up 31% to £17.1 million

·       Adjusted EPS2 up 6% to 25.0p, despite dilutive effect of placings during the year

·       Strong operating cash flowNet cash generated from operating activities, before acquisition and restructuring costs, of £28.3 million (FY2020: £11.2 million). Significantly improved underlying cash conversion of 110% (FY2020: 83%)

·       Margin expansion: Divisional adjusted EBITDA1,2 margin increased from 13.1% to 16.2%:

o   Governance, Risk & Compliance ("GRC") adjusted EBITDA1,2 margin increased to 32.7% (FY2020: 27.2%) and Testing, Inspection & Certification ("TIC") to 12.6% (FY2020: 11.9%)

·       Strong balance sheet: Net cash (excluding IFRS 16 lease liabilities) at 31 March 2021 of £43.3 million (2020: net debt of £32.3 million) following recent oversubscribed placing to raise approximately £100 million to fund the Group's well defined acquisition-led expansion strategy

·       Medium-term growth strategy: Targeting run rate c.£500m of revenue and c.£100m adjusted EBITDA1,2 with 90%+ cash conversion by the end of FY2024

Strategic and operational highlights

·      Fifteen acquisitions completed during the year combined with strong operational and strategic progress

·      New divisional structure: GRC and TIC divisions, reflecting the transformation in scope, scale and quality of earnings of the Group spanning growing and attractive UK regulatory compliance service and software sectors

·      Update on medium-term growth strategy:

·      Deepen:

o  Ellis Whittam transforms our scale and capabilities in Employment Law, HR Compliance and Health & Safety advisory. Two further bolt-ons in HR, Safety & Employment Law. Good progress with integration of Law At Work with attractive synergies being realised

o  WPL, a leading provider of wastewater compliance services, one further bolt-on in Water & Air Hygiene

o  Morgan Fire and Hadrian Technology adding further scale to our Fire Safety & Security activities, one further bolt-on in Fire Safety & Security

·      Broaden:

·      Acquisitions of Wrightway Health, Black & Banton, NOSS, Caritas, and post-period end, Integral and Healthwork, building scale in new core Occupational Health market within GRC

·      Healthwork acquisition significantly further broadens our presence in the Occupational Health market, in which the Group now has run rate revenue in the region of £20 million and provides a platform from which to further consolidate

o  Acquisition of ESP and, post period-end, Cater Leydon Millard, further developing employment law capability in the mid-market

·      Strengthen:

o  Significant, margin-enhancing (+310bps), operational improvements in productivity and efficiency

o  Despite some COVID-19 site access challenges, largely limited to H1 FY2021 within TIC, continued organic growth in recurring revenues and customers

o  Positive structural trends across our markets with increased corporate and societal focus on health, safety, well-being and compliance

o  Further successes in cross-selling with 26% (FY2020: 23%) of clients taking multiple services from across our operations

·      Digital:

o  Acquisition of Elogbooks, a leading provider of contractor management software and services, marking a significant step in our strategy to deliver integrated technology and services to enhance the compliance, safety and upkeep of our clients' premises

o  Acquisition of DeltaNet and post-period end, Cylix, adding attractive new software capability in safety, compliance and diversity eLearning

o  Acquisition of YouManage HR software develops Ellis Whittam's digital offering with attractive synergies displacing third-party spend

o  Strong progress with digital integration of Meridian and Elogbooks, significant continued investment in technology roadmap

Current trading and outlook

·      Strong start to the new financial year with good levels of organic growth consistent with our medium-term targets in the high single digits across both GRC and TIC operations

·      Run rate revenues of c.£280 million with c.83% recurring revenues

·      Integration of our Employment Law, HR, Safety & Occupational Health activities proceeding to plan with synergies in line with expectations

·      Eight acquisitions completed so far during the new financial year, further deepening our presence across key markets

·      Strong pipeline of earnings enhancing acquisitions to add further scale and breadth to our platform for growth across service and software


Commenting on the results Alex Dacre, Chief Executive, said:

"We are pleased to report a year of significant financial, strategic and operational progress. We have continued to execute at pace upon the opportunity to build the UK leader in business-critical services and software across GRC and TIC markets. We have made substantive progress in executing our M&A strategy, delivered further strong margin expansion and cash generation whilst organically building our base of recurring revenues, which now stand at over 83%.

The platform acquisition of Ellis Whittam has transformed the scale of our GRC activities and Elogbooks represents a significant step in the delivery of our digital strategy. Alongside thirteen further bolt-ons during the year, and eight post period-end, we continue to add scale and capabilities to the Group in line with our strategy of providing our clients with a comprehensive approach to their business-critical regulatory compliance needs.

We have made a strong start to the new financial year, with good levels of organic growth, and look forward to delivering further profitable growth. This progress underpins our confidence to continue executing our strategy and to achieve our medium-term targets of run rate revenues of c.£500 million and adjusted EBITDA of c.£100 million by the end of FY2024 through deepening our market share across our sectors, broadening our activities across the business-critical arena, strengthening our business via operational improvements and delivering on our digital strategy to reach compliance software revenues of c.£50 million.

I would like to express my thanks to our whole team for their exceptional response during the COVID-19 pandemic and for their significant contribution in delivering our strategy during the year."

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