REG - Marlowe PLC - Interim results for the six months to 30 Sept 2024
05/12/2024 07:00
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RNS Number : 8876O Marlowe PLC 05 December 2024
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constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as amended by regulation 11 of the Market Abuse (Amendment)
(EU Exit) Regulations 2019/310. Upon the publication of this announcement
via Regulatory Information Service, this inside information is now considered
to be in the public domain.
5 December 2024
Marlowe plc
Interim results for the six months to 30 September 2024
Marlowe is now focussed on the highly attractive and regulated
business-critical service markets across its Testing, Inspection &
Certification businesses and has delivered performance in line with
expectations
All integration programmes and restructuring investments now concluded in line
with market guidance and no further restructuring investments expected in the
second half of the year
Marlowe plc ("Marlowe", the "Group" or the "Company"), a leading testing,
certification and inspection service provider, announces its interim results
for the six months ended 30 September 2024 ("HY25").
On 3 June 2024, the Group announced the completion of the sale of certain
Governance, Risk & Compliance ("GRC") software and services assets
("Divestment") for an Enterprise Value of £430 million in cash. Subsequently,
on 12 September 2024, the Group announced the demerger of its Occupational
Health division ("Demerger") and subsequent registration as a separate public
limited company under the name Optima Health plc.
Marlowe's continuing operations since 23 September 2024 now comprise the
Testing, Inspection & Certification ("TIC") division on which the Group's
forward strategy is focussed.
Financial performance
ADJUSTED RESULTS - CONTINUING OPERATIONS HY25 HY24 Change
Revenue £151.7m £146.3m +4%
Adjusted EBITDA(1,2) £15.3m £15.4m (1)%
Adjusted EBITDA margin(1,2) 10.1% 10.5% (40)bps
Adjusted operating profit(2) £9.0m £9.7m (7)%
Adjusted earnings/(loss) per share - basic(2) 6.4p 5.4p +19%
Net cash/(debt) (excluding lease liabilities) £30.8m £(192.7)m
STATUTORY RESULTS - CONTINUING OPERATIONS HY25 HY24
Revenue £151.7m £146.3m
Operating profit/(loss)(3) £3.4m £(5.9)m
Profit/(loss) before tax(3) £2.4m £(8.7)m
Earnings/(loss) per share - basic(3) 2.5p (9.3)p
STATUTORY RESULTS - GROUP HY25 HY24
Revenue £220.4m £251.3m
Operating loss(3) £(0.9)m -
Profit/(loss) before tax(3) £161.7m £(8.9)m
Earnings/(Loss) per share - basic(3) 174.4p (9.6)p
Net cash/(debt) £9.2m £(219.4)m
( )
(1) Earnings before interest, taxes, depreciation and amortisation ("EBITDA")
(2) Explanation of non-IFRS measures are contained within the Financial Review
and note 2 and 3
(3) Further details shown in consolidated statement of comprehensive income
STRATEGY AND TRADING PERFORMANCE - CONTINUING OPERATIONS
A leading TIC service provider
· Marlowe's forward-looking strategy is to focus on the highly
regulated business-critical service markets across TIC with strong recurring
revenues based on non-discretionary customer spend and underpinned by
regulatory and insurance requirements
· Following completion of the Demerger, the primary focus in the
near term remains on driving margin enhancement and organic growth
· The TIC service markets do however remain highly fragmented, and
bolt-on acquisitions continue to present an attractive route to delivering
additional shareholder value
· The Group's TIC division is expected to deliver approximately
£325 million of revenue and adjusted EBTIDA in the region of £40 million for
the 12-month period to 30 September 2025, Head Office costs are expected to be
£4 million over that 12-month period
Strategic review creating significant shareholder value
· Following the strategic review announced in November 2023, the
Company completed the Divestment on 3 June 2024 for an enterprise value of
£430 million
· The Group has since returned an aggregate of approximately £200
million to shareholders, with £150.3 million via a special dividend, equating
to £1.55 per ordinary share, paid on 5 July 2024 and good progress made on
the share buyback programme which commenced on the same day, returning a
further £51.0 million to shareholders as at 2 December 2024
· In addition to the Divestment, the Group subsequently completed
the Demerger of its Occupational Health activities ("OH") on 23 September
2024, creating a separate public limited company under the name Optima Health
plc
· Marlowe's Board will continue to execute the delivery of the
Group's strategy while regularly evaluating ways to further maximise
shareholder value
FINANCIAL REVIEW - CONTINUING OPERATIONS
· Revenue from continuing operations up 4% to £151.7 million
o Organic growth of 3% 1 reflecting mid-single digit growth in Fire Safety
& Security and low single digit growth in Water & Air Hygiene
· Adjusted EBITDA from continuing operations was £15.3 million
(HY24: £15.4 million)
o Adjusted EBITDA margins decreased 40bps to 10.1% (HY24: 10.5%)
o Whilst the Group achieved good margin enhancement in its Fire Safety &
Security business, there were margin decreases in our Water & Air Hygiene
business as a result of the implementation of operational processes that will
deliver in the longer term
o Head office costs during the period were £2.8 million (HY24: £2.6
million) and the Group aims to reduce this further
o Divisional adjusted EBITDA margins are expected to improve, and the Board
has a medium-term target of 15% as we focus on operational efficiencies and
revenue mix
· Statutory operating profit from continuing operations was £3.4
million (HY24 Statutory operating loss of £(5.9) million) as a result of the
significant reduction in adjusting items including restructuring and
acquisition costs
FINANCIAL REVIEW - THE GROUP
· Group revenue, including discontinued operations, decreased 12%
to £220.4 million reflecting the Divestment and the Demerger in the period
· Statutory profit before tax of £161.7 million (HY24: loss before
tax of £8.9 million)
o The increase in the period primarily reflects the £165.9 million profit
on the Divestment
o Total finance costs of £3.3 million (HY24: £8.9 million) comprises the
utilisation of the prior debt facility for the first two months of the period,
which was fully settled following the Divestment, and IFRS 16 lease interest
largely residing in the continuing operations
· Statutory earnings per share of 174.4 pence (HY24: loss per share
9.6 pence)
· Strong balance sheet
o Net cash (excluding leases) at 30 September 2024 was £30.8 million (30
September 2023 net debt (excluding leases) of £192.7 million). The movement
reflects the £430 million Divestment, settlement of the old debt facility,
payment of the £150.3 million special dividend and the good progress made on
the share buyback programme in the period
o The Group generated £6.4 million of cash from both discontinued and
continuing operations in the period before interest and tax (HY24 of £16.7
million). This is after £14.2 million of costs relating to the Divestment,
the Demerger and restructuring
o
· Successful execution of integration programme
o Finalised integration programmes with all costs associated with
restructuring investments now concluded in line with market guidance
CURRENT TRADING AND OUTLOOK
· The Board remains focussed on ensuring the forward-looking
strategy maximises shareholder value
· Marlowe operates in highly attractive and regulated
business-critical service markets across TIC
· No further restructuring costs expected in the second half of the
year
· We have continued to make good progress with the ongoing share
buyback programme. Since the 30 September 2024 we have returned an additional
£10.0 million to shareholders acquiring 2.9 million ordinary shares as at 4
December 2024. The Group has now returned an aggregate £51.0 million to
shareholder as part of this programme
· The recently announced UK Autumn Budget 2024 is likely to have an
impact on margins in the near term, but we are confident we can mitigate these
additional costs in the medium term through pricing and operational
efficiencies
· The primary focus continues to be on driving organic growth while
improving margins and delivering attractive free cash flow
Lord Ashcroft, Interim Non-Executive Chair, commented:
"The Group has undergone significant change in the period to focus on the
attractive TIC market, having completed the Divestment of certain GRC software
and service assets for £430 million in June and subsequently demerging its
Occupational Health division in September 2024."
"Marlowe's business now consists of the market leading compliance service TIC
division which comprise the Fire Safety & Security and Water & Air
Hygiene businesses. The Group has a strong balance sheet and is well
positioned to drive organic growth, margin enhancement and strong cash
generation."
"Marlowe has today published an interim results presentation which has been
made available on the Marlowe plc website."
For further information:
Marlowe plc
Lord Ashcroft, Interim Non-Executive Chair www.marloweplc.com
Adam Councell, Chief Financial Officer 0203 813 8498
Benjamin Tucker, Head of Group Reporting IR@marloweplc.com (mailto:IR@marloweplc.com)
Cavendish Capital Markets Limited (Nominated Adviser & Broker)
Ben Jeynes 0207 220 0500
George Lawson
FTI Consulting 0203 727 1340
Nick Hasell
Alex Le May
BUSINESS REVIEW
This has been a significant period of change for Marlowe. In November 2023, we
announced a review of the Group's structure as it had become clear that the
operational activities of the Group had diversified into sectors with varying
operational and financial characteristics.
Following the announcement of the strategic review we received an offer for a
number of our GRC software and service assets. Consequently, in February 2024,
we announced a binding agreement for these assets for an enterprise value of
£430 million, a valuation that represented the 121% of Marlowe's market
capitalisation on the day prior to the announcement.
On 3 June 2024 we announced the completion of the Divestment and the intention
to return of up to £225 million of proceeds to shareholders, comprising a
£150 million special dividend and a share buyback programme of up to £75
million. During the period we retired the Group's debt facility and on 5 July
2024 returned £150.3 million via a special dividend, which equated to £1.55
per ordinary share, and initiated the share buyback programme.
Moreover, on 12 September 2024, the Group announced the demerger of its
Occupational Health division to be registered as a separate public limited
company under the name Optima Health plc. The Demerger will allow Marlowe, as
a market-leading TIC business and Optima Health, as the UK's leading
provider of technology enabled corporate health and wellbeing solutions, as
two distinct listed entities and will enable each to fully focus on their
respective end markets and future strategic objectives.
The continuing TIC operations comprise the Fire Safety & Security and the
Water & Air Hygiene businesses. These operations are focussed on ensuring
the safety and compliance of customers' business premises in accordance with
relevant regulation and legislation and serve approximately 27,000 customers
across the UK. The TIC sector was the first market Marlowe entered and where
it made its original acquisitions in 2016. This sector continues to display
the same attractive structural growth drivers which are underpinned by
regulation, legislation and high levels of recurring income.
We continue to see significant opportunity for further organic growth as we
look ahead supplemented by selective acquisitions. In the near term we are
focussed on driving organic revenues, improving margins and delivering
attractive free cash flow. We have a refocused strategy and are well
positioned to capitalise on the attractive TIC service markets we serve.
Financial results - continuing operations
The Group performed in line with expectations for the six months ended 30
September 2024. Revenue from continuing operations grew 4% to £151.7 million
benefiting from 3% organic growth and a small contribution from acquisitions
made at the start of prior period.
Adjusted EBITDA, in a period of significant integration focus and
transformation was £15.3 million (HY24: £15.4 million). Adjusted EBITDA
margins in TIC decreased to 11.9% (HY24: 12.3%) as a result of a period of
operational change in our main Water & Air Hygiene business where we have
focussed on putting in place operational processes that will deliver in the
longer term, so we are well positioned to successfully drive margins. This
margin reduction was partially offset by good margin enhancement in our Fire
Safety & Security business as we successfully transitioned work from
subcontractors to in-house fee-earners and benefit from our integration
investments. We expect our TIC division to deliver adjusted EBITDA margin
improvements with a medium-term target of 15% as we focus on delivering
operational efficiencies and improving revenue mix.
Statutory profit before tax for the Group was £161.7 million (HY24 loss
before tax: £8.9 million), with the improvement resulting from the profit on
the Divestment in the period and a reduction in adjusting items.
The continuing businesses of Fire Safety & Security and Water & Air
Hygiene are both highly cash generative and free cash flow is a key metric
that both the Board and management are focussed on. The Group, including
discontinued operations, generated £6.4 million of cash from operations after
£14.2 million of acquisition and restructuring costs as we have focussed on
finalising integration programmes.
Attractive and resilient business model
The compliance markets we serve are underpinned by regulation and are
therefore predominantly non-discretionary to our customers and are required
throughout the economic cycle. An estimated 75% of our revenues are recurring
with customers typically contracted on 3-to-5-year agreements, providing us
with secure and highly visible revenue streams.
Both of our markets have structural growth characteristics and benefit from
onerous and evolving regulations with increasing enforcement action from
regulators. Compliance spending continues to grow at attractive rates from the
increasing focus on health & safety and growing insurance requirements.
Since entering the TIC markets in 2016, Marlowe has built significant scale
and expanded its range of services. This growth has become a key
differentiator, enabling us to deliver services across all UK postcodes and
address the needs of complex and larger multi-site customers. Currently, 90%
of our 27,000-strong customer base comprises organisations with complex or
multi-site operations, a segment that smaller and mid-sized competitors are
unable to serve effectively.
Our customer profile aligns with broader trends in the professionalisation of
procurement. Smaller sites are increasingly being consolidated under
multi-site operations, often managed by centralised procurement teams and
property management firms. These organisations place a heightened focus on
compliance, regulatory adherence and insurance requirements and this focus
positions Marlowe well to be a provider of choice.
Strong balance sheet and disciplined approach to capital allocation
Adjusted net cash (excluding leases) was £30.8 million as at 30 September
2024 from an adjusted net debt position of £176.6 million as at 31 March
2024. This follows the £430 million Divestment, settlement of the old debt
facility, the return of capital via £150.3 million special dividend and
£41.0 million via the share buyback programme in the period. This was
supplemented by good cash generation in the period.
On 24 June 2024, the Group entered into a new unsecured 3-year Revolving
Credit Facility ("RCF") of £50 million with an uncommitted accordion facility
of £50 million, and these facilities are currently undrawn.
The Board anticipates that the Group's strong cash generation will be used
either to return further capital to shareholders or, when appropriate, invest
in bolt-on acquisition opportunities across TIC.
Strengthening and integrating
We have made significant operational progress on continuing operations in the
period and restructuring activity and associated costs have now concluded. We
have built the clear market leader in Water & Air Hygiene and are a top 3
player in Fire Safety & Security. During the period, we placed a
significant focus on finalising restructuring costs and invested £2.1 million
(HY24: £4.1 million) into restructuring, below of our £5 million target.
Marlowe's primary focus in the near term remains on driving operational
efficiency and organic growth across these integrated platforms within the
highly attractive and defensive TIC markets while driving strong cash
conversion.
Outlook
The second half of the year has started in line with the Board's expectations,
and we continue to see strong demand for our TIC services. The Group is
focused on driving margin enhancement and expects to deliver high single digit
adjusted EBITDA growth.
The recently announced UK Autumn Budget 2024 is expected to put a temporarily
pressure on margins through the delay in recovering the increase in National
Insurance costs and we are expecting some impact on project lead times through
greater customer hesitancy. We are confident that through pricing and
operational efficiency we will be able to mitigate this impact and continue to
aim to expand margins in medium term.
Looking forward, the Group's TIC division is expected to deliver £325 million
of revenue and adjusted EBTIDA in the region of £40 million for the 12 month
period to 30 September 2025. Head office costs are expected to be £4 million.
In the absence of any future acquisitions, the Group expects no further
restructuring costs.
The Board retains the flexibility to use the remaining net cash proceeds from
the Divestment alongside the Group's strong cash generation to return further
return capital or to pursue carefully selected bolt-on acquisitions where
appropriate.
TESTING, INSPECTION AND CERTIFICATION
Revenue increased 4%, reflecting organic growth of 3% in the period and a
small contribution from acquisitions made at the start HY24. Adjusted EBITDA
was £18.0 million resulting in margins decreasing by 40 basis points.
Fire Safety & Security, which represents nearly half of divisional
revenues, delivered mid-single digit organic growth and high single digit
organic EBITDA growth.
The primary fire installation and service business, representing around two
thirds of the subdivision's revenues, delivered good organic growth with
rising productivity, reaching a revenue per day per fee-earner of up to £700.
Growth was also driven by the kitchen fire suppression business where our
innovative interlock solution is helping businesses meet new regulatory
requirements. Although performance in the passive fire segment was weaker, we
have addressed this by appointing the new leadership and implementing
structural changes that position us well in this growing market.
During the period, we undertook a review of key contracts supported by the
strong emphasis placed on improving our data analytics to optimise customer
profitability. This shift away from historical less profitable contracts has
led to some short-term revenue impact, but it has been a key driver in
achieving strong EBITDA margin growth by redeploying our fee-earners to
higher-margin opportunities.
Restructuring costs in the period amounted to £1.2 million, as we finalised
the integration of acquisitions completed in the prior year. While some
recently acquired businesses posed initial challenges, we have taken decisive
steps to address these and are confident in recovery in the second half.
Subcontractor usage, which was a focus area in FY24, has now normalised,
contributing further to margin improvement.
Our investment in employee training via Marlowe Academy has been a success,
evidenced by improved retention and reduced dependency on external talent.
Trainee hires are able to serve customers within 14 weeks, allowing our
experienced engineers to focus on more complex jobs, driving efficiency,
customer service and EBITDA growth. We continue to benefit from strong
customer retention rates, with compliance rates at a best in class 98% (FY24),
first time fix rates increasing to 78% and a zero tolerance focus on customer
compliance backlog. Specific sector development strategies over the past two
years on critical national infrastructure has resulted in a record project
install order book that has more than double in the last 18 months.
The second half of the year has started well, with organic growth expected to
continue in the mid-single digits, supported by margin enhancements. Our new
scheduling system, set for FY26 rollout, is designed to further improve
revenue per fee-earner per day, operation efficiency and customer response
KPIs. While the recently announced UK Autumn budget will affect near-term
margins, we are confident in our ability to mitigate these costs through
efficiencies and pricing in the medium term.
The Water & Air Hygiene sub-division, accounting for just over half of the
division's revenues, delivered mid-single-digit organic revenue growth,
however EBITDA margins contracted.
The primary water business, which accounts for approximately 40% of
sub-divisional revenue, remains a key focus for the divisional management
team. We are actively aligning key systems and processes within this segment
to enhance performance. While these efforts have temporarily impacted margins
in the period, we are now showing improvements and are confident that the
actions taken will unlock significant opportunities for margin improvement
through enhanced operational and process efficiencies. Additionally, the Air
business, which represents approximately 5% of divisional revenues,
experienced a decline due to employee attrition caused by competitive industry
dynamics earlier in the year. These challenges have since stabilised.
The environmental engineering business, which specialises in designing and
installing wastewater equipment for sewage and industrial wastewater and
represents around 20% of sub-divisional revenues, performed strongly and
delivered high-teens revenue growth. This performance reflects our strong
market reputation and our ability to swiftly meet customer needs through our
extensive expertise.
The remaining elements of our Water and Air business consist of our training,
asbestos and chemicals businesses. Our training business, while a smaller
contributor to revenues, posted mid-teens organic growth. This growth
highlights our increased emphasis on offering training services to both
external engineers and existing customer as we leverage our best-in-class
training facilities. The asbestos business performed in line with
expectations, and the chemical business remained largely level as we manage
commodity pricing well in a changing market.
The Water & Air Hygiene sub-division has undergone a significant
transformation. This sub-division is now unified under the lead brand Marlowe
Environmental Services which has allowed us to market our broad range of
services more effectively and has been well received by customers, suppliers
and our people. Our integration efforts in this business have resulted in
advanced governance and improved learning & development enabling us to
address skills shortages in the market more effectively. Driven by the success
of the Fire, Safety & Security trainee programme, we are replicating this
initiative with Water & Air Hygiene. We have seen a significant step
change in employee engagement and are starting to see a positive impact on
retention.
Restructuring costs, as with Fire Safety & Security, have now ceased.
During the period we incurred £0.9 million of restructuring costs. Over the
past six years, these investments have established us as the clear UK market
leader in this sector whilst maintaining best in class (98%) compliance rates
on national level. We are well positioned to continue to unlock additional
customer spend through an expanded multi-product and service offering.
Additionally, improved data capture is driving more effective cross-selling
opportunities between Water & Air Hygiene and the Fire Safety &
Security division.
The second half of the year has begun in line with expectations, with
mid-single-digit organic growth anticipated, supported by margin enhancements.
However, the Autumn 2024 Budget is expected to put a temporary pressure on
margins and we are expecting some impact on project lead times within our
engineering business. We are confident that medium-term mitigation strategies,
including pricing and operational improvements, will offset these challenges
and drive margin expansion.
FINANCIAL REVIEW
Overview
Revenue decreased 12% in period to £220.4 million (HY24: £251.3 million) as
a result of the Divestment which completed in the period.
Statutory profit before tax was £161.7 million (HY24 loss before tax: £8.9
million) largely reflecting the £165.9 million profit recognised from the
Divestment. The profit recognised from the Divestment is not subject to
corporation tax due to substantial shareholder exemption with the exception of
IMSM which was acquired within 12 months of the binding agreement for the
assets. Statutory basic earnings per share was 174.4 pence (HY24 loss per
share of 9.6 pence).
Acquisition and disposal costs increased to £10.8 million (HY24: £5.5
million) reflecting both the Divestment and Demerger that took place in the
period. These costs are one-off in nature and will not continue into the
second half. Finance costs decreased to £3.3 million (HY24: £8.9 million)
and reflects the utilisation of the previous debt facility for the first two
months of the period before repaying in full and retiring the facility. This
has since been replaced with a £50 million RCF which is currently undrawn.
Other adjusting items in the first half of the year included the amortisation
of acquired intangibles, share-based payments and other non-trading items.
Following the Divestment in the first half of FY25 and the Demerger of the
Occupational Health division, our financial results for the first half of FY24
have been restated to classify these businesses as discontinued operations.
The rest of this report is therefore mainly focused on our continuing
operations which comprise the TIC division and head office costs.
Revenue from continuing operations increased by 4% to £151.7 million (HY24:
£146.3 million), with a statutory operating profit of £3.4 million compared
to a statutory operating loss of £5.9 million in the comparable prior period.
Adjusted EBITDA from continuing operations was £15.3 million (HY24: £15.4
million), reflecting the impact of operational changes in our water business
that affected margins. However, this was offset by strong growth in our Fire,
Safety & Security segment, driven by the benefits of recent integration
investments.
Non-IFRS measures
IFRS measures ensure that the financial statements contain all the information
and disclosures required by all accounting standards and regulatory
obligations that apply to the Group. The financial statements also include
measures which are not defined by generally accepted accounting principles
such as IFRS. We believe this information, along with comparable IFRS
measures, is useful as it provides investors with a basis for measuring the
performance of the Group on an underlying basis. The Board and our managers
use these financial measures to evaluate our operating performance. Non-IFRS
financial measures should not be considered in isolation from, or as a
substitute for, financial information presented in compliance with IFRS.
Similarly, non-IFRS measures as reported by us may not be comparable with
similar measures reported by other companies.
Due to the nature of acquisitions, costs associated with those acquisitions,
subsequent integration costs and the non-cash element of certain charges, the
Directors believe that adjusted measures provide shareholders with a useful
representation of the underlying earnings derived from the Group's business
and a more comparable view of the year-on-year underlying financial
performance of the Group.
A reconciliation between statutory operating profit and EBITDA is shown below:
HY25 HY24
Continuing operations £'m £'m
Operating profit/(loss) 3.4 (5.9)
Amortisation of acquisition intangibles 3.1 3.1
Depreciation and amortisation of non-acquisition intangibles 6.3 5.7
EBITDA 12.8 2.9
A reconciliation between adjusted and statutory performance measure for the
continuing operations is shown below:
Six months ended 30 September 2024 Profit Operating profit EBITDA
Continuing operations
before tax £'m £'m
£'m
Statutory reported 2.4 3.4 12.8
Restructuring costs 2.1 2.1 2.1
Amortisation of acquired intangibles 3.1 3.1 -
Share-based payments (excluding SAYE schemes) 0.4 0.4 0.4
Adjusted reported 8.0 9.0 15.3
Six months ended 30 September 2023 (Loss)/profit before tax Operating profit EBITDA
Continuing operations
£'m £'m £'m
Statutory reported (8.7) (5.9) 2.9
Acquisition and disposal costs (including strategic review costs) 4.4 4.4 4.4
Restructuring costs 4.1 4.1 4.1
Amortisation of acquired intangibles 3.1 3.1 -
Share-based payments (excluding SAYE schemes) 0.8 0.8 0.8
Fair value losses in contingent consideration and acquisition related 3.2 3.2 3.2
incentive schemes
Adjusted reported 6.9 9.7 15.4
Adjusting items
There were no acquisition and disposal costs (including strategic review
costs) in the period for continuing operations as the Group did not undertake
any acquisitions. The prior period costs of £4.4 million were the costs
associated with the Strategic Review and the four bolt-on acquisitions that
took place at the start of HY24.
Restructuring costs, being the costs associated with the integration of
acquisitions, have been a key component of delivering shareholder value by
increasing future returns made on acquired businesses. Restructuring costs for
the period for continuing operations were £2.1 million (HY24: £4.1 million)
reflecting the finalisation of restructuring investment. In the absence of any
future acquisitions, we do not anticipate any further restructuring costs.
Amortisation of acquired intangible assets for the period was £3.1 million
(HY24: £3.1 million). Non-cash share-based payment charge for the period was
£0.4 million (HY24: £0.8 million) and largely relates to the charge for
executive share-based plans.
Certain long term incentive schemes for platform businesses have been
established to incentivise key members of our platform acquisition's senior
management to create shareholder value through the successful acquisition,
restructuring and integration of businesses in their chosen service sectors.
These schemes have similar characteristics to earn out structures in place
within the Group and have a similar purpose. As such, these schemes are
considered to be part of the investing activities of the group and are
not-recurring in nature.
Further details on the items considered when arriving at adjusted performance
measures can be found in Note 3.
Earnings per share
Basic adjusted earnings per share are calculated as adjusted profit for the
continuing operations for the year less a standard tax charge divided by the
weighted average number of shares in issue in the year. Basic earnings per
share reflect the actual tax charge.
Earnings per share* (EPS) - Continuing Operations HY25 HY24
Basic adjusted earnings per share 6.4p 5.4p
Basic earnings/(loss) per share 2.5p (9.3)p
*Refer to note 5
Weighted average number of shares in issue was 93,172,661 (HY24: 96,072,077)
with the reduction reflecting the ongoing share buyback programme where the
Company purchased 8,946,087 in the period. Following the cancellation of the
shares repurchased, Marlowe had 88,004,519 ordinary shares of 50 pence each in
issue as at 30 September 2024.
Interest
Finance costs for the continuing operations amounted to £1.0 million in the
period (HY24: £2.8 million). This reflects the apportioned interest relating
to the utilisation of the previous debt facility at the start of the reporting
year which has since been retired and interest costs from lease liabilities.
Taxation
UK Corporation Tax is calculated at 25% of the estimated assessable profit for
the year.
Statement of financial position
The Group maintains a strong balance sheet with net assets as at 30 September
2024 of £214.6 million (30 September 2023: £438.3 million). At the same date
total assets were £306.9 million (30 September 2023: £893.2 million), and
total liabilities were £92.3 million (30 September 2023: £454.9 million).
Total assets primarily consist of intangible assets of £150.8 million and
trade and other receivable of £83.7 million. Total liabilities include trade
payable of £59.7 million and deferred tax liabilities of £9.7 million which
largely relate to intangible assets.
Cash flow, net debt and financing
The primary net debt movements in the period reflects the completion of the
Divestment and the return of capital to shareholders.
HY25
£m
Cash generated from Group operations before interest, tax, disposal and 20.6
restructuring costs
Disposal costs (10.8)
Restructuring costs (3.4)
Cash generated from Group operations before interest and tax 6.4
Lease repayments (5.8)
Net finance costs (3.4)
Tax (4.8)
Net capex (4.3)
Net Divestment proceeds (net of cash) 410.5
Proceeds from share issuance 0.3
Dividend (150.3)
Share repurchases (inc. costs associated with repurchases) (41.2)
-Movement in net debt 207.4
Opening net debt (excluding leases) (176.6)
Closing net cash (excluding leases) 30.8
During the period, Marlowe generated £20.6 million of cash from operations
before restructuring costs of £3.4 million and disposal costs of £10.8
million which largely relate to the costs of the Divestment and Demerger in
the period.
The Group had £5.8 million of lease expenses which largely relate to
continuing operations. Net capital expenditure totalled £4.3 million of which
£1.8 million relates to the continuing operations.
In the period the Group repaid its old debt facility following the proceeds
received on the completion of the Divestment. The Group then returned £150.3
million to shareholders via a dividend and subsequently £41.0 million via the
share buyback programme 2 in the period.
Net cash as at 30 September 2024, including inter alia £21.6 million of lease
liabilities, amounted to £9.2 million (31 March 2024 net debt £203.2
million). Adjusted net cash (excluding lease liabilities) was £30.8 million
(31 March 2024 net debt £176.6 million). Since the period end, the Group has
returned a further £10.0 million to shareholders via the share buyback
programme, as of 4 December 2024.
On 24 June 2024, the Group entered into a new unsecured 3-year Revolving
Credit Facility ("RCF") of £50 million with an uncommitted accordion facility
of £50 million, these facilities are currently undrawn.
Key Performance Indicators ('KPIs')
The Group uses many different KPIs at an operational level which are specific
to the business and provide information to management. The Board uses KPIs
that focus on the financial performance of the Group such as revenue, adjusted
EBITDA, adjusted EPS and net cash generated from operations.
Unaudited consolidated statement of comprehensive income
For the period ended 30 September 2024
Unaudited six months ended 30 September 2024 Unaudited six months ended 30 September 2023
Note Continuing operations Discontinued operations Total Continuing Operations Discontinued operations Total
£'m £'m £'m £'m £'m £'m
Revenue 2 151.7 68.7 220.4 146.3 105.0 251.3
Cost of sales (91.7) (41.6) (133.3) (89.2) (54.4) (143.6)
Gross profit 60.0 27.1 87.1 57.1 50.6 107.7
Administrative expenses excluding acquisition and other costs (51.0) (15.9) (66.9) (47.4) (27.3) (74.7)
Acquisition and disposal costs (including strategic review) 3 - (10.8) (10.8) (4.4) (1.1) (5.5)
Restructuring costs 3 (2.1) (1.3) (3.4) (4.1) (5.3) (9.4)
Amortisation of acquired intangibles 3 (3.1) (3.4) (6.5) (3.1) (9.7) (12.8)
Share based payments (excluding SAYE schemes) and legacy long-term incentives 3 (0.4) - (0.4) (0.8) - (0.8)
Fair value losses in contingent consideration and acquisition related 3 - - - (3.2) (1.3) (4.5)
incentive schemes
Total administrative expenses (56.6) (31.4) (88.0) (63.0) (44.7) (107.7)
Operating profit/(loss) 3.4 (4.3) (0.9) (5.9) 5.9 -
Finance costs (1.0) (2.3) (3.3) (2.8) (6.1) (8.9)
Profit on disposal of discontinued operations - 165.9 165.9 - - -
Profit/(loss) before tax 2.4 159.3 161.7 (8.7) (0.2) (8.9)
Income tax credit/(charge) 4 (0.1) 0.9 0.8 (0.2) (0.1) (0.3)
Profit/(loss) for the year 2.3 160.2 162.5 (8.9) (0.3) (9.2)
Other comprehensive income
Total comprehensive profit /(loss) for the year 2.3 160.2 162.5 (8.9) (0.3) (9.2)
Attributable to owners of 2.3 160.2 162.5 (8.9) (0.3) (9.2)
the parent
Profit/(loss) per share attributable to owners of the parent (pence)
Total
Basic 5 2.5p 174.4p (9.3)p (9.6)p
Diluted 5 2.5p 173.8p (9.3)p (9.6)p
Unaudited consolidated statement of comprehensive income
Audited year ended 31 March 2024
Note Continuing operations Discontinued operations Total
£'m £'m £'m
Revenue 2 292.3 210.9 503.2
Cost of sales (176.9) (108.6) (285.5)
Gross profit 115.4 102.3 217.7
Administrative expenses excluding acquisition and other costs (96.9) (55.4) (152.3)
Acquisition and disposal costs (including strategic review) 3 (5.1) (2.7) (7.8)
Restructuring costs 3 (8.3) (9.9) (18.2)
Amortisation of acquired intangibles 3 (6.3) (19.3) (25.6)
Share based payments (excluding SAYE schemes) and legacy long-term incentives 3 0.8 - 0.8
Fair value losses in contingent consideration and acquisition related 3 (2.8) (2.2) (5.0)
incentive schemes
Total administrative expenses (118.6) (89.5) (208.1)
Operating profit/(loss) (3.2) 12.8 9.6
Finance costs (5.9) (12.7) (18.6)
Exceptional finance costs (0.1) (1.8) (1.9)
Total finance costs (6.0) (14.5) (20.5)
Loss before tax (9.2) (1.7) (10.9)
Income tax credit/(charge) 4 3.4 (2.7) 0.7
Loss for the year (5.8) (4.4) (10.2)
Other comprehensive income - - -
Total comprehensive loss for the year (5.8) (4.4) (10.2)
Attributable to owners of (5.8) (4.4) (10.2)
the parent
Loss per share attributable to owners of the parent (pence)
Total
Basic 5 (6.0)p (10.6)p
Diluted 5 (6.0)p (10.6)p
Unaudited consolidated statement of changes in equity
For the six months ended 30 September 2024
Share capital Share premium Merger Capital Redemption reserve Other reserves Retained earnings/(deficit) £m Total equity
£m £m reserve £m £m £m
£m
Balance at 1 April 2023 47.9 384.8 9.9 - 4.6 (3.9) 443.3
Loss for the period - - - - - (9.2) (9.2)
Total comprehensive loss for the period - - - - - (9.2) (9.2)
Transaction with owners
Share-based payments - - - - 1.2 - 1.2
Issue of shares during the year 0.3 0.1 2.6 - - - 3.0
Cancellation of share premium - (384.9) - - - 384.9 -
0.3 (384.8) 2.6 - 1.2 384.9 4.2
Balance at 30 September 2023 (unaudited) 48.2 - 12.5 - 5.8 371.8 438.3
Balance at 1 October 2023 48.2 - 12.5 - 5.8 371.8 438.3
Loss for the period (1.0) (1.0)
Total comprehensive loss for the period - - - - - (1.0) (1.0)
Transaction with owners
Share-based payments - - - - (1.3) - (1.3)
Issue of shares during the year 0.2 1.3 - - - - 1.5
0.2 1.3 - - (1.3) - 0.2
Balance at 31 March 2024 48.4 1.3 12.5 - 4.5 370.8 437.5
Balance at 1 April 2024 48.4 1.3 12.5 - 4.5 370.8 437.5
Profit for the period - - - - - 162.5 162.5
Total comprehensive profit for the period - - - - - 162.5 162.5
Transaction with owners
Share-based payments - - - - 0.7 - 0.7
Issue of shares during the period 0.1 0.2 - - - - 0.3
Purchase and cancellation of own shares (4.5) (0.2) - 4.5 - (41.2) (41.4)
Cash dividend paid to shareholders - - - - - (150.3) (150.3)
Distribution of discontinued operations - - - - - (194.7) (194.7)
(4.4) - - 4.5 0.7 (386.2) (385.5)
Balance at 30 September 2024 (unaudited) 44.0 1.3 12.5 4.5 5.2 147.1 214.6
Unaudited consolidated statement of financial position
As at 30 September 2024
Notes Unaudited Unaudited Audited
six months six months year
ended 30 September 2024 ended 30 September 2023 ended
£'m £'m 31 March
2024
£'m
ASSETS
Non-current assets
Intangible assets 7 150.8 667.4 343.2
Property, plant and equipment 8.0 13.1 10.1
Right of use assets 19.9 25.7 25.4
Trade and other receivables - 2.1 -
Deferred tax asset 4.4 4.4 4.4
Total non-current assets 183.1 712.7 383.1
Current assets
Inventories 9.1 9.9 9.7
Trade and other receivables 8 83.7 132.0 98.0
Cash and cash equivalents 9 30.8 36.3 -
Current tax asset 0.2 2.3 1.3
Assets classified as held for sale - - 398.2
Total current assets 123.8 180.5 507.2
Total assets 306.9 893.2 890.3
LIABILITIES
Current liabilities
Trade and other payables (59.7) (129.4) (83.5)
Financial liabilities - bank overdrafts 9 - - (25.8)
Financial liabilities - borrowings 9 - - (206.0)
Financial liabilities - lease liabilities 9 (12.5) (9.4) (9.4)
Provisions (1.1) (1.6) (1.2)
Liabilities directly associated with assets classified as held for sale - - (82.3)
(73.3) (140.4) (408.2)
Non-current liabilities
Trade and other payables - (12.2) (0.7)
Financial liabilities - borrowings 9 - (229.0) -
Financial liabilities - lease liabilities 9 (9.1) (17.3) (16.9)
Deferred tax liabilities (9.7) (54.7) (26.0)
Provisions (0.2) (1.3) (1.0)
(19.0) (314.5) (44.6)
Total liabilities (92.3) (454.9) (452.8)
Net assets 214.6 438.3 437.5
Unaudited consolidated statement of financial position
As at 30 September 2024
Notes Unaudited Unaudited Audited
six months six months year
ended 30 September 2024 ended 30 September 2023 ended
£'m £'m 31 March
2024
£'m
EQUITY
Share capital 44.0 48.2 48.4
Share premium account 1.3 - 1.3
Merger relief reserve 12.5 12.5 12.5
Capital Redemption Reserve 4.5 - -
Other reserves 5.2 5.8 4.5
Retained earnings 147.1 371.8 370.8
Equity attributable to owners of parent 214.6 438.3 437.5
Unaudited consolidated statement of cash flows
For the six months ended 30 September 2024
Notes Unaudited Unaudited Audited
six months six months year
ended 30 September 2024 ended 30 September 2023 ended
£'m £'m 31 March
2024
£'m
Net cash generated from operating activities before interest and tax 11 6.4 16.7 57.8
Net finance costs (3.4) (8.3) (17.8)
Income taxes paid (4.8) (1.0) (2.0)
Net cash (used in)/generated from operating activities (1.8) 7.4 38.0
Cash flows from investing activities
Purchases of property, plant and equipment and non-acquisition intangibles (5.0) (7.3) (14.4)
Disposal of property, plant and equipment 0.7 0.4 1.4
Consideration received - - 4.3
Purchase of subsidiary undertakings net of cash acquired - (26.3) (31.7)
Disposal of discontinued operations 465.7 - -
Cash flows generated/(used in) investing activities 461.4 (33.2) (40.4)
Cash flows from financing activities
Proceeds from share issues 0.3 - 1.5
Utilisation of debt facility 3.0 42.0 51.3
Repayment of debt facility (209.0) (4.0) (36.3)
Settlement of contingent consideration - - (2.5)
Repayment of debt upon purchase of subsidiary undertaking - (0.4) (0.5)
Lease repayments (5.8) (5.7) (11.9)
Dividend (150.3) - -
Share buybacks (41.2) - -
Net cash (used in)/generated from financing activities (403.0) 31.9 1.6
Net increase/(decrease) in cash and cash equivalents 56.6 6.1 (0.8)
Cash and cash equivalents at start of period (25.8) 30.2 30.2
Cash and cash equivalents from discontinued operations - - (55.2)
Cash and cash equivalents at the end of period 30.8 36.3 (25.8)
Cash and cash equivalents shown above comprise:
Cash at bank 30.8 36.3 -
Bank overdrafts - - (25.8)
Notes to the financial information for the year ended 30 September 2024
1. Basis of Preparation
Basis of preparation
The unaudited consolidated interim financial information of the Group for the
six months ended 30 September 2024 was approved by the Board of Directors and
authorised for issue on 4 December 2024. The disclosed figures are not
statutory accounts in terms of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2024, on which the auditors
gave an audit report which was unqualified and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006, have been filed with
the Registrar of Companies. The annual financial statements of the Group are
prepared in accordance with applicable law and UK-adopted International
Accounting Standards (UK-IAS).
The comparative figures for the financial year ended 31 March 2024 and the six
months ended 30 September 2023 are consistent with the Group's annual
financial statements and interim financial statements respectively.
The consolidated interim financial results are presented in pounds sterling
and, unless stated otherwise, shown in pounds million to one decimal place.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance, financial position, its cash flows,
liquidity position, principal risks and uncertainties affecting the business
are set out in the Business Review.
The Group meets its day-to-day working capital requirements through cash
generation and its financing facilities.
On 24 June 2024, a new financing facility was put in place allowing the Group
to draw up to a maximum of £100 million subject to certain covenants. To date
there have been no drawdowns against the facility. Given that the underlying
business is cash generating and having considered FY25 budgets and FY26
forecasts, the Directors are comfortable that the Group has adequate resources
to meet its ongoing financing requirements.
Details of the Group's borrowing facilities are given in note 9. The Group's
budget for 2025 and forecasts for 2026, show that the Group should be able to
operate within the level of its new facility and comply with the relevant
covenants.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for a period of at least 12
months from the approval date of this report and accordingly they continue to
adopt the going concern basis of accounting in preparing the annual financial
statements. In making this assessment, the Directors have considered the
financing arrangements available to the Group and the Group's cashflow
forecasts, taking into account significant but plausible downside trading
scenarios.
Accounting policies
This interim report has been prepared in accordance with the recognition and
measurement requirements of UK adopted International Accounting Standards
(IAS) but does not include all the disclosures that would be required under
IAS. The accounting policies adopted in the interim financial statements are
consistent with those adopted in the last annual report for financial year
ended 31 March 2024 and those applicable for the year ending 31 March 2025.
Critical accounting estimates and judgements continue to be applied to the
identification of separable intangibles on acquisition and rate of customer
attrition, acquisition and other costs, valuation of separable intangibles on
acquisition, impairment of non-financial assets, impairment of trade
receivables and recoverability of amounts due from contract assets.
2. Segmental analysis
The Group has been organised into one main reporting segment, Testing,
Inspection & Certification ("TIC"). At each reporting date, the Group
reviews its reporting segments to determine if the segment disclosure
continues to be appropriate.
As described in the business review, the Board announced in February 2024 that
it had entered into a binding agreement for the sale of certain of the GRC
software and services assets. This included all assets from the Worknest,
Health and Safety compliance and Elogbooks operating segments. The disposal
completed on 31 May 2024 and the disposal group assets were classified as held
for sale at 31 March 2024 and trading results classified as discontinued
operations.
Additionally, and as described in the business review, the Board announced in
September 2024 the demerger of its Occupational Health divisions from Marlowe
to form Optima Health plc as an independent company. The demerger completed on
the 26 September 2024 and the demerged group assets and trading results were
classified as discontinued operations.
During the year, there has not been a significant change to the underlying
nature of the retained business. However, the disposal and demerger noted
above has resulted in a change to the reportable segments with TIC being the
only operating segment continuing. Other than this, the results and economic
characteristics of the business remains consistent with the prior year and
therefore continuing to disclose the reportable segment consistently is
appropriate for six-month period ending 30 September
2024.
Services per segment operate as described in the Business Review and the
judgments taken in aggregating the operating segment are disclosed in note 2.
The key profit measures are revenue, adjusted EBITDA and adjusted profit
before tax and are shown before acquisition and disposal costs (including
strategic review costs), amortisation of acquired intangibles, share based
payments (excluding SAYE schemes) and fair value gains/losses in contingent
consideration.
The vast majority of trading of the Group is undertaken within the United
Kingdom. Segment assets include intangibles, property, plant and equipment,
inventories, receivables and cash. Central assets include deferred tax and
head office assets. Segment liabilities comprise operating liabilities.
Central liabilities include deferred tax, corporate borrowings and head office
liabilities. Capital expenditure comprises additions to application software,
property, plant and equipment. Segment assets and liabilities are allocated
between segments on an actual
basis.
Unaudited continuing operations for six-month period
ended
30 September 2024 30 September 2023
TIC Head Office TIC Head Office
Total Total
Continuing operations £'m £'m £'m £'m £'m £'m
Revenue 158.0 - 158.0 150.6 - 150.6
Inter-segment elimination (6.3) - (6.3) (4.3) - (4.3)
Revenue from external customers 151.7 - 151.7 146.3 - 146.3
Segment adjusted operating profit/(loss) 11.8 (2.8) 9.0 12.3 (2.6) 9.7
Acquisition and disposal costs (including strategic review costs) - (4.4)
Restructuring costs (2.1) (4.1)
Amortisation of acquired intangibles (3.1) (3.1)
Share based payments (excluding SAYE schemes) and legacy long-term incentives (0.4) (0.8)
Fair value losses n contingent consideration and acquisition related incentive - (3.2)
schemes
Operating profit/(loss) 3.4 (5.9)
Finance costs (1.0) (2.8)
Profit/(loss) before tax 2.4 (8.7)
Tax charge (0.1) (0.2)
Profit/(loss) after tax 2.3 (8.9)
Segment assets 276.9 30.0 306.9 275.2 480.0 755.2
Segment liabilities (91.6) (0.7) (92.3) (75.6) (271.7) (347.3)
Capital expenditure (1.8) - (1.8) (1.9) - (1.9)
Depreciation and amortisation (6.3) (3.1) (9.4) (5.7) (3.4) (9.1)
Audited continuing operations year ended 31 March 2024
31 March 2024
TIC Head Office
Total
Continuing operations £'m £'m £'m
Revenue 303.7 - 303.7
Inter-segment elimination (11.4) - (11.4)
Revenue from external customers 292.3 - 292.3
Segment adjusted operating profit/(loss) 23.2 (4.7) 18.5
Acquisition and disposal costs (including strategic review costs) (5.1)
Restructuring costs (8.3)
Amortisation of acquired intangibles (6.3)
Share based payments (excluding SAYE schemes) and legacy long-term incentives 0.8
Fair value losses in contingent consideration and acquisition related (2.8)
incentive schemes
Operating loss (3.2)
Finance costs (5.9)
Exceptional finance costs (0.1)
Loss before tax (9.2)
Tax credit 3.4
Loss after tax (5.8)
Segment assets 89.3 379.4 468.7
Segment liabilities (79.6) (266.1) (345.7)
Capital expenditure (3.8) - (3.8)
Depreciation and amortisation (12.0) (6.6) (18.6)
Discontinued operations
Unaudited Unaudited Audited
six months six months year
ended 30 September 2024 ended 30 September 2023 ended
31 March
2024
Discontinued operations £'m £'m £'m
Revenue 69.5 106.5 214.9
Inter-segment elimination (0.8) (1.5) (4.0)
Revenue from external customers 68.7 105.0 210.9
Segment adjusted operating profit 11.2 23.3 46.9
Acquisition and disposal costs (including strategic review costs) (10.8) (1.1) (2.7)
Restructuring costs (1.3) (5.3) (9.9)
Amortisation of acquired intangibles (3.4) (9.7) (19.3)
Fair value losses in contingent consideration and acquisition related - (1.3) (2.2)
incentive schemes
Operating (loss)/profit (4.3) 5.9 12.8
Finance costs (2.3) (6.1) (12.7)
Exceptional finance costs - - (1.8)
Profit on disposal of discontinued operations 165.9 - -
Profit/(loss) before tax 159.3 (0.2) (1.7)
Tax credit/(charge) 0.9 (0.1) (2.7)
Profit/(loss) after tax 160.2 (0.3) (4.4)
Segment assets - 138.0 421.6
Segment liabilities - (107.6) (107.1)
Capital expenditure (3.2) (5.4) (10.7)
Depreciation and amortisation (6.2) (13.7) (27.9)
The revenue from external customers was derived from the Group's principal
activities primarily in the UK (where the Company is domiciled).
Reconciliation of segment adjusted operating profit to adjusted EBITDA
Unaudited continuing operations for six-month period ended
30 September 2024 30 September 2023
TIC Head Office Total TIC Head Office Total
Continuing operations £'m £'m £'m £'m £'m £'m
Segment adjusted operating profit/(loss) 11.8 (2.8) 9.0 12.3 (2.6) 9.7
Depreciation and amortisation of non-acquisition intangibles 6.2 0.1 6.3 5.7 - 5.7
Adjusted EBITDA 18.0 (2.7) 15.3 18.0 (2.6) 15.4
Audited continuing operations year ended 31 March 2024
31 March 2024
TIC Head Office Total
Continuing operations £'m £'m £'m
Segment adjusted operating profit/(loss) 23.2 (4.7) 18.5
Depreciation and amortisation of non-acquisition intangibles 12.0 0.4 12.4
Adjusted EBITDA 35.2 (4.3) 30.9
Discontinued operations
Unaudited Unaudited Audited
six months six months year
ended 30 September 2024 ended 30 September 2023 ended
31 March
2024
Discontinued operations £'m £'m £'m
Segment adjusted operating profit 11.2 23.3 46.9
Depreciation and amortisation of non-acquisition intangibles 2.7 4.2 8.5
Adjusted EBITDA 13.9 27.5 55.4
The above tables reconcile segment adjusted operating profit/(loss) to
adjusted EBITDA, which excludes separately disclosed acquisition and other
costs, to the standard profit measure under IFRS (Operating Profit). This is
the Group's Alternative Profit Measure used when discussing the performance of
the Group. The Directors believe that adjusted EBITDA and operating profit is
the most appropriate approach for ascertaining the underlying trading
performance and trends as it reflects the measures used internally by senior
management for all discussions of performance and also reflects the starting
profit measure when calculating the Group's banking covenants.
Adjusted EBITDA is not defined by IFRS and therefore may not be directly
comparable with other companies' adjusted profit measures. It is not intended
to be a substitute, or superior to, IFRS measurements of profit.
Major customers
For the six month period ended 30 September 2024, no customers (30 September
2023: nil) individually accounted for more than 10% of the Group's total
revenue.
3. Adjusting items
Due to the nature of acquisition and other costs in relation to each
acquisition and the non-cash element of certain charges, the Directors believe
that adjusted operating profit, adjusted EBITDA and adjusted measures of
profit before tax and earnings per share provide shareholders with a more
appropriate representation of the underlying earnings derived from the Group's
business and a more comparable view of the year-on-year underlying financial
performance of the Group. The adjusting items shown on the consolidated
statement of comprehensive income and the rationale behind the Director's view
that these should be included as adjusting items are detailed below:
Adjusting item Rationale
Acquisition and disposal costs (including strategic review costs) Acquisition and disposal costs (including strategic review costs) totalled
£10.8 million during the period (HY24: £5.5 million). These costs included
the disposal of certain GRC software and service assets, as well as expenses
associated with the demerger of the Group's Occupational Health assets,
completed in the first half of the year. The strategic review, conducted in
the prior period (HY24), resulted in costs such as professional fees, legal
fees, and staff-related expenses. These costs are non-recurring and not
considered to be reflective of the underlying trading performance.
Restructuring costs Restructuring costs, being the costs associated with the integration of
acquisitions, remain a key component of delivering shareholder value by
increasing returns made on acquired businesses. Restructuring costs for the
six-month period ending 30 September 2024 were £3.4 million (HY24: £9.4
million) reflecting the integration programmes within period. No further
restructuring expenses are anticipated in the second half of the year.
Restructuring costs primarily consisted of:
· The cost of duplicated staff roles and other duplicated
operational costs during the integration and restructuring period;
· The redundancy cost of implementing the post completion staff
structures; and
· IT costs associated with the integration and transfer to Group IT
systems, including costs of third party software used in the delivery of
customer contracts where there is a programme to transition such software to
one of the Group's existing platforms.
Amortisation of acquired intangibles The amortisation charge is primarily in relation to acquired intangible assets
resulting from fair value adjustments under IFRS 3. Given the overall size of
the amortisation charge and it being non-cash in nature, this cost is adjusted
for in deriving the Group's alternative performance measures. In accordance
with IFRS 5, no amortisation was recorded for the GRC software and service
assets during the period, as these assets were classified as held for sale.
For transparency, we note that the Group does not similarly adjust for the
related revenue and results generated from its business combinations in its
alternative profit measures.
Share-based payments (excluding SAYE schemes) and legacy long-term incentives Charges associated with share-based payment schemes (excluding SAYE schemes
which remain are classed as administrative expenses) and legacy long-term
incentives have been included as adjusting items. Although share-based
compensation is an important aspect of the compensation of our employees and
executives, management believes it is useful to exclude share-based
compensation expenses from adjusted profit measures to better understand the
long-term performance of our underlying business. Share-based compensation
expenses are non-cash charges and are determined using several factors,
including expectations surrounding future performance, employee forfeiture
rates and, for employee payroll-related tax items, the share price. As a
result, these charges are not reflective of the value ultimately received from
the awards.
Fair value losses in contingent consideration and acquisition related Movements in contingent consideration are considered to be part of the
incentive schemes investing activities of the Group and are therefore not considered to be
reflective of the underlying trading performance. Further, share based
compensation expenses are not reflective of the value ultimately received by
the recipients of the awards. In addition, certain legacy long terms
incentives are considered to be part of the investing activities of the Group
and non-recurring in nature.
Exceptional finance Exceptional finance costs relate to the non-cash unwinding of the discount
applied to contingent consideration to reflect the time value of money.
costs Therefore, it is not considered part of the underlying trading of the Group.
4. Taxation
The underlying tax charge is based on the expected tax rate (25%) for the year
ending 31 March 2025 applied to taxable trading profits for the period. The
tax rate applied to the comparative periods ending 30 September 2023 and 31
March 2024 was 25%.
5. Earnings per ordinary share
Both the basic and diluted earnings per share have been calculated using the
profit attributable to shareholders of the parent company (Marlowe plc) as the
numerator, i.e. no adjustments to profit were necessary in 2024 or 2023.
Unaudited Unaudited Audited year
six months
six months
ended
ended 30
ended 30
31 March
September
September
2024
2024
2023
Group
Profit/(loss) after tax for the period £162.5m £(9.2)m £(10.2)m
Basic earnings/(loss) per share 174.4p (9.6)p (10.6)p
Fully diluted earnings/(loss) per share 173.8p (9.6)p (10.6)p
Continuing
Profit/(loss) after tax for the period £2.3m £(8.9)m £(5.8)m
Basic earnings/(loss) per share 2.5p (9.3)p (6.0)p
Fully diluted earnings/(loss) per share 2.5p (9.3)p (6.0)p
Weighted average number of shares in issue 93,172,661 96,072,077 96,418,045
Potential dilution of share options 299,833 - -
Weighted average fully diluted number of shares in issue 93,472,494 96,072,077 96,418,045
Potential dilution of share options (31 March 2024: 579,564, 30 September
2023: 1,111,486) were excluded from the diluted weighted-average number of
ordinary shares calculation for the continuing operations because their effect
would have been anti-dilutive.
Adjusted earnings per share
The Directors believe that the adjusted earnings per share provide a more
appropriate representation of the underlying earnings derived from the Group's
business. The adjusting items are shown in the table below:
Group Unaudited Unaudited Audited
six months
six months
ended 30
ended 30 year
September
September
ended
2024
2023
31 March
2024
Profit/(loss) before tax for the period 161.7 (8.9) (10.9)
Adjustments:
Acquisition and disposal costs (including strategic review costs) 10.8 5.5 7.8
Restructuring costs 3.4 9.4 18.2
Amortisation of acquired intangibles 6.5 12.8 25.6
Share-based payments (excluding SAYE schemes) 0.4 0.8 (0.8)
Fair value losses in contingent consideration and acquisition related - 4.5 5.0
incentive schemes
Exceptional finance costs - - 1.9
Divestment of discontinued operations (165.9) - -
Adjusted profit before tax for the period 16.9 24.1 46.8
Continuing operations Unaudited Unaudited Unaudited
six months
six months
ended 30
ended 30 year
September
September
ended
2024
2023
31 March
2024
Profit/(loss) before tax for the period 2.4 (8.7) (9.2)
Adjustments:
Acquisition and disposal costs (including strategic review costs) - 4.4 5.1
Restructuring costs 2.1 4.1 8.3
Amortisation of acquired intangibles 3.1 3.1 6.3
Share-based payments (excluding SAYE schemes) 0.4 0.8 (0.8)
Fair value losses in contingent consideration and acquisition related - 3.2 2.8
incentive schemes
Exceptional finance costs - - 0.1
Adjusted profit before tax for the period 8.0 6.9 12.6
The adjusted earnings per share, based on weighted average number of shares in
issue during the year, is calculated below:
Group Unaudited Unaudited Audited
six months
six months
ended 30
ended 30 year
September
September
ended
2024
2023
31 March
2024
Adjusted profit before tax (£'m) 16.9 24.1 46.8
Tax at 25% (4.2) (6.0) (11.7)
Adjusted profit after taxation (£'m) 12.7 18.1 35.1
Adjusted basic earnings per share (pence) 13.6 18.8 36.4
Adjusted fully diluted earnings per share (pence) 13.6 18.8 36.4
Continuing operations Unaudited Unaudited Unaudited
six months
six months
year
ended 30
ended 30
ended
September
September
31 March
2024
2023
2024
Adjusted profit before tax (£'m) 8.0 6.9 12.6
Tax at 25% (2.0) (1.7) (3.1)
Adjusted profit after taxation (£'m) 6.0 5.2 9.5
Adjusted basic earnings per share (pence) 6.4 5.4 9.9
Adjusted fully diluted earnings per share (pence) 6.4 5.4 9.9
6. Dividends
On 3rd June 2024, the Company declared a special dividend in respect of the
current year. The dividend of £1.55 per Marlowe ordinary share amounted to
£150.3 million and was paid on 5 July 2024.
In September 2024, Marlowe Plc declared a non-cash dividend in the form of all
of the shares held in its subsidiary, Optima Health PLC, to its shareholders.
The dividend was measured at the carrying value of the subsidiary (£194.7m).
7. Intangible assets
Goodwill Customer relationships Applications software Content database Trade Total
name
£'m £'m £'m £'m £'m £'m
Cost
1 April 2023 424.7 204.7 57.9 8.0 6.1 701.4
Acquired with subsidiary 18.5 14.5 - 0.3 - 33.3
Additions - - 5.0 - - 5.0
Disposals - - (0.3) - - (0.3)
30 September 2023 443.2 219.2 62.6 8.3 6.1 739.4
1 October 2023 443.2 219.2 62.6 8.3 6.1 739.4
Acquired with subsidiary 3.8 (3.7) - (0.3) 0.8 0.6
Additions - - 5.7 - - 5.7
Disposals - - (0.3) - - (0.3)
Reclassified as held for sale (210.5) (98.5) (33.9) (8.0) (1.8) (352.7)
31 March 2024 236.5 117.0 34.1 - 5.1 392.7
1 April 2024 236.5 117.0 34.1 - 5.1 392.7
Acquired with subsidiary - - - - - -
Additions - - 0.6 - - 0.6
Disposals (118.8) (60.3) (30.9) - (5.1) (215.0)
30 September 2024 117.7 56.7 3.8 - - 178.2
Accumulated amortisation and impairment
1 April 2023 - 42.4 12.2 1.9 0.8 57.3
Charge for the period - 9.7 4.2 0.7 0.3 14.9
Disposals - - (0.2) - - (0.2)
30 September 2023 - 52.1 16.2 2.6 1.1 72.0
1 October 2023 - 52.1 16.2 2.6 1.1 72.0
Charge for the period - 9.9 4.5 0.6 0.4 15.4
Disposals - - (0.4) - - (0.4)
Reclassified as held for sale - (27.2) (6.6) (3.2) (0.4) (37.4)
31 March 2024 - 34.8 13.6 - 1.1 49.5
1 April 2024 - 34.8 13.6 - 1.1 49.5
Charge for the period - 5.4 1.9 - 0.3 7.6
Disposals - (13.7) (14.6) - (1.4) (29.7)
30 September 2024 - 26.5 0.9 - - 27.4
Carrying amount
30 September 2023 443.2 167.1 46.4 5.7 5.0 667.4
31 March 2024 236.5 82.2 20.5 - 4.0 343.2
30 September 2024 117.7 30.2 2.9 - - 150.8
8. Trade and other receivables
Unaudited Unaudited Audited year
six months
six months
ended
ended 30
ended 30
31 March
September
September
2024
2024
2023
£'m £'m £'m
Current
Trade receivables 55.0 81.4 69.2
Less: provision for impairment of trade receivables (0.4) (1.8) (2.1)
Trade receivables - net 54.6 79.6 67.1
Other receivables 1.3 4.6 1.0
Contract assets 3.2 5.3 3.1
Accrued income 16.8 29.5 20.9
Prepayments 7.8 12.3 5.9
Contingent consideration receivable in less than one year - 0.7 -
83.7 132.0 98.0
Non-current
Contingent consideration receivable in more than one year - 2.1 -
- 2.1 -
Contingent consideration represented the divestment of non-core activities
within the Group's Air Quality business following the sale of Ductclean (UK)
Limited in March 2020 for a consideration of up to £7.0 million and
additional amounts receivable on projects concluded before the transaction.
These were financial assets classified as measured at fair value through
profit or loss. As at 31 March 2024, the contingent consideration amounted to
£nil as a settlement agreement was made with the counterparty to settle the
outstanding amount of contingent consideration.
9. Net debt and borrowing facilities
Unaudited Unaudited Audited year
six months
six months
ended
ended 30
ended 30
31 March
September
September
2024
2024
2023
£'m £'m £'m
Continuing Operations:
Cash at bank and in hand 30.8 36.3 -
Bank overdrafts due within one year - - (25.8)
Bank loans due within one year - - (206.0)
Bank loans due after one year - (229.0) -
Leases due within one year (12.5) (9.4) (9.4)
Leases due after one year (9.1) (17.3) (16.9)
Net cash/ (debt) for continuing operations 9.2 (219.4) (258.1)
Discontinued Operations:
Cash at bank and in hand - - 55.2
Leases due within one year - - (0.1)
Leases due after one year - - (0.2)
Net cash/ (debt) for total Group 9.2 (219.4) (203.2)
Borrowing facilities
At 31 March 2024, the Group had a £180 million revolving credit facility and
an additional accordion facility of £60 million with HSBC UK Bank plc,
National Westminster Bank plc, Citibank, N.A., Credit Industriel et
Commercial, Fifth Third Bank, and The Governor and Company of the Bank of
Ireland which was due to expire on 9 February 2025. £206 million of the
total facility was drawn as at 31 March 2024. All of the Group's borrowings
were in sterling.
Following the disposal of the GRC business this facility was repaid in full on
5 June 2024 and fully extinguished.
On 24 June 2024, the Group entered into a new unsecured 3-year Revolving
Credit Facility (RCF) for £50 million with Barclays Bank PLC and HSBC UK Bank
plc. The RCF includes two 1-year extension options and an uncommitted
accordion facility of £50 million.
10. Called up share capital and share premium
Called up share capital
The issued ordinary share capital is as follows:
Allotted, issued and fully paid Number of ordinary shares
£'m
1 April 2023 47.9 95,882,065
Share Options ("SAYE 2020") 597,609
Share-based consideration for IMSM acquisition 2,217
30 September 2023 48.2 96,481,891
Share Options ("SAYE 2020") 325,827
31 March 2024 48.4 96,807,718
Share Options ("SAYE 2020") 49,913
Marlowe plc Long Term Incentive Plan 2019 92,975
Cancellation of ordinary shares (8,946,087)
30 September 2024 44.0 88,004,519
Share premium
In year ending 31 March 2024, the Company gained shareholder and court
approval to release £384.9 million from the share premium account to retained
earnings.
11. Cash generated from operations
Unaudited Unaudited Audited year
six months
six months
ended
ended 30
ended 30
31 March
September
September
2024
2024
2023
£'m £'m £'m
Profit/(Loss) before tax 161.7 (8.9) (10.9)
Depreciation of property, plant and equipment, depreciation of right-of-use 9.0 10.0 20.9
assets and amortisation of non-acquisition intangibles
Amortisation of acquired intangibles 6.5 12.8 25.6
Loss on sale of fixed assets - - (0.2)
Share based payments (excluding SAYE schemes) 0.4 0.8 (0.8)
Fair value losses in contingent consideration and acquisition related - 3.2 5.0
incentive schemes
Gain recognised on disposal of discontinued operations (165.9) -
Net finance costs 3.3 8.9 20.5
Decrease/(increase) in inventories 0.4 (0.2) -
Increase in trade and other receivables (8.3) (10.2) (1.2)
(Decrease)/increase in trade and other payables (0.7) 0.3 (1.1)
Cash generated from operations 6.4 16.7 57.8
12. Related party transactions
There were no related party transactions during the current or prior period.
13. Post balance sheet events
Since the 30 September 2024, as at 4 December 2024, Marlowe has purchased a
further 2,945,529 ordinary shares for a consideration of £10.0 million at a
volume weighted average price of 339.50 pence per ordinary share.
1 Based on an adjusted prior year comparable of £147.5m which includes
performance of acquisitions made in the prior period
2 Costs associated with repurchase of shares in the period amounted to £0.2
million
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