REG - Marlowe PLC - Preliminary results
29/06/2023 07:00
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RNS Number : 3060E Marlowe PLC 29 June 2023
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(EU Exit) Regulations 2019/310. Upon the publication of this announcement
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29 June 2023
Marlowe plc
Preliminary unaudited results for the year ended 31 March 2023
Strong trading performance and strategic progress
Marlowe plc ("Marlowe", the "Group" or the "Company"), the leader in
business-critical services and software which assure safety and regulatory
compliance, announces its unaudited results for year ended 31 March 2023
("FY23").
Financial performance
ADJUSTED RESULTS FY23 FY22 Change
Revenue £465.7m £315.9m 47%
EBITDA(1,2) £82.7m £54.4m 52%
Divisional EBITDA margin(1,2,3) 19.0% 18.7% 30bps
Operating profit(2) £64.3m £42.0m 53%
Profit before tax(2) £53.6m £38.1m 41%
Earnings per share - basic(2) 45.3p 37.7p 20%
Net debt (excluding lease liabilities) £160.8m £108.8m
FY23 FY22
STATUTORY RESULTS
Revenue £465.7m £315.9m
EBITDA(1) £48.8m £37.8m
Operating profit £6.4m £10.5m
(Loss)/profit before tax £(6.9)m £5.9m
Earnings per share - basic (3.9)p 0.8p
Net cash generated from operations £74.3m £34.0m
Net debt £188.9m £133.3m
Marlowe is holding a full year results presentation for investors and analysts
at 09:00 BST today. A
link to this event is here
(https://www.investis-live.com/marloweplc/6492be0100e6861200534557/uxoo) .
An on-demand version of the presentation will subsequently be made available
on the Marlowe plc website.
(1) Earnings before interest, taxes, depreciation and amortisation ("EBITDA")
(2) Explanation of non-IFRS measures are contained within the Chief Financial
Officer's review
(3) Divisional EBITDA margin does not include central costs
Financial highlights
Strong and resilient performance as we continue to execute our compliance
strategy and achieve our medium term financial targets
· Group revenue increased 47% to £465.7 million
· Adjusted EBITDA increased 52% to £82.7 million
· We have now surpassed our target of generating £500 million
run-rate revenue by the end of FY24 and continue to expect to exceed our
c.£100 million run-rate adjusted EBITDA target organically by the same date
o Current annualised run-rate revenue £505 million
o Current annualised run-rate EBITDA £93 million
· Statutory EBITDA increased 29% to £48.8 million
· Statutory loss before tax was £6.9 million reflecting the
non-cash increase in amortisation of acquisition intangibles, significant
integration investment and material movement in contingent consideration
provisions
Record levels of organic growth across service & software
· Organic revenue growth of 10%, ahead of previous guidance, with
both divisions delivering strong growth in excess of market (GRC growth of 8%;
TIC growth of 11%)
· Organic growth driven by good levels of new business and
increasing market share, up-sell and cross-sell and increasing client lifetime
value, supported by pricing
· Approximately 85% of revenue was recurring (either SaaS,
consultancy subscription or service contracts) and is underpinned by
regulatory compliance
· Software Annual Recurring Revenue ("SaaS ARR") of over £43
million approximately 10% of Group revenues
· Software activities generate approximately £20 million of Group
annualised run-rate adjusted EBITDA
· Continued attractive structural growth across our markets
Strong balance sheet and operating cash flow
· Net cash generated from operations increased by 119% to £74.3
million (FY22: £34.0 million), free cash flow conversion of 90% in line with
our medium-term target
· Net cash generated from operating activities after interest, tax
and acquisition and restructuring costs increased by 291% to £33.6 million
(FY22: £8.6 million)
· Net debt (excluding leases) for year ended 31 March 2023 was
£160.8 million (£156.2 million at 30 September 2022), lower than previous
guidance. The H2 movement in net debt reflects the £18 million settlement of
deferred consideration from previous acquisitions and the £9 million
acquisition of PCS Consultancy in February 2023. This was largely offset by
strong cash generation in the second half of the year
· Working capital increases in the first half due to adverse timing
unwound as expected in the second half:
o Free cash flow conversion in the second half of the year of 127%
· Net debt/adjusted EBITDA leverage ratio was just below 2.0x as at
31 March 2023 (2.1x as at 30 September 2022), within our target range of 1.5x
to 2.5x
Margin expansion
· Divisional adjusted EBITDA margin increased by 30bps to 19.0%
driven by
o Integration programmes and operational improvements and the benefits of
our increased scale in the context of margin dilutive M&A
o Successful use of price to maintain margins in the context of the
inflationary but manageable cost pressures we have seen during the year
Successful execution of M&A and integration programme
· £56 million of capital invested(1) during FY23 across 11 bolt-on
acquisitions, for an average multiple of 6.5x adjusted EBITDA
· Integrations on-track and acquisitions performing in-line with
pre-acquisition expectations
o Strong progress made with Occupational Health integration programme and
eLearning integration now complete
o New divisional GRC organisational structure in place driving further
revenue & cost synergies
· Pipeline of earnings enhancing acquisitions is well-developed
(1)Based on enterprise value of £56 million which includes expected deferred
consideration of £11m
Current trading and outlook
· The new financial year has started well, with continued organic
momentum, and we expect to continue to deliver strong financial performance
with at least high single digit organic growth complemented by selective
earnings enhancing acquisitions
· We have completed four bolt-on acquisitions since the start of
the new financial year for a total consideration of £15.3 million
· Continued strong levels of demand across Marlowe's client base,
supported by attractive market growth and the non-discretionary nature of our
services & software which are driven by regulatory requirements
Commenting on the results Alex Dacre, Chief Executive, said:
"We are pleased to report another strong underlying financial performance in
the year in which we saw excellent growth in organic revenues, profits and
earnings per share, compounded by selective acquisitions across our service
and software business streams. As expected, cash flow was strong in the second
half with £74.3 million of cash generated from our operations during the
year, up 119% on the prior year.
We delivered record levels of organic growth during the year at 10% and are
now a business with over £500 million run-rate revenues, exceeding our end of
FY24 medium term target. Run-rate EBITDA is £93 million, and we continue to
expect to reach our £100 million EBITDA target organically by the end of
FY24. Divisional EBITDA margins have continued their consistent upward trend
and increased by 30bps to 19.0% as we leverage operational and integration
efficiencies.
Following a highly acquisitive FY22 during which we deployed over £320
million, we focused strongly on integration programmes in FY23. These
programmes are on track and largely complete, and we expect integration costs
to significantly decrease into FY24. Alongside this, we have continued to
selectively deliver on our acquisition programme, deploying a further £56m
during the financial year.
We have made a positive start to the new financial year, with strong levels of
organic growth. We have completed a further four bolt-on acquisitions post
year-end deploying £15.3 million of capital. Our acquisition pipeline is
well-developed, and we expect to use our attractive cash-flow characteristics
to selectively execute upon these opportunities whilst appropriately managing
leverage."
For further information:
Marlowe plc
Alex Dacre, Chief Executive www.marloweplc.com
Adam Councell, Chief Financial Officer 0203 813 8498
Benjamin Tucker, Investor Relations Manager IR@marloweplc.com (mailto:IR@marloweplc.com)
Cenkos Securities (Nominated Adviser & Joint Broker) 0207 397 8900
Nicholas Wells
Ben Jeynes
George Lawson
Berenberg, Gossler & Co. KG, London Branch (Joint Broker) 0203 207 7800
Mark Whitmore
Ben Wright
Dan Gee-Summons
Stifel (Joint Broker) 0207 710 7600
Matthew Blawat
Francis North
FTI Consulting 0203 727 1340
Nick Hasell
Alex Le May
CHIEF EXECUTIVE'S REVIEW
Group results
During FY23 we delivered on each of our key strategic and operational
objectives in our mission to build the leader in business-critical services
and software which assure regulatory compliance:
· Deepening & Broadening our compliance scale and capabilities
as the one-stop compliance service & software provider, via organic growth
& bolt-on acquisitions
· Strengthening our operations via operational improvements and
effective integration programmes resulting in margin expansion, whilst
ensuring our SaaS products and service provision are best-in-breed
· Digitising our compliance offering, both organically and
inorganically, as part of our goal to build the leader in Compliance Software
Whilst delivering this pleasing strategic and operational progress, the Group
delivered a strong financial performance with revenue increasing 47% to
£465.7 million (FY22: 315.9 million), driven by excellent organic growth of
10% and contributions from acquisitions made during the year and the prior
year. Adjusted EBITDA increased by 52% to £82.7 million with adjusted EBITDA
margin increasing 30bps to 19.0% (FY22: 18.7%) as we continue to drive
efficiencies and integration synergies and also benefit from growth in some of
our higher margin segments, particularly Compliance Software. Adjusted profit
before tax increased 41% to £53.6 million and adjusted EPS increased 20% to
45.3p (FY22: 37.7p).
Statutory EBITDA was £48.8m (FY22: £37.8m). Statutory operating profit was
£6.4 million (FY22: £10.5 million). This reflects a non-cash increase in
amortisation of acquisition intangibles, movement in contingent consideration
related to increased provisions for acquisition earn-outs where we expect to
see strong outperformance and significant investment in integration in the
year. Statutory loss before tax was £6.9m million (FY22: £5.9 million
profit) and basic loss per share was 3.9p (FY22: 0.8p profit), reflecting the
above factors combined with higher finance costs on the Group's debt
facilities as a result of increases in interest rates. Further details of
Marlowe's financial performance are set out in the Chief Financial Officer's
review on pages 11 to 14.
We operate in highly cash generative sectors with beneficial working capital
characteristics (working capital was 2% of revenue for the year) and free cash
flow generation is a key focus for management. As expected, we saw strong cash
performance in the second half of the year (H2 cash conversion 127% with
£51.7 million net cash generated from operations). Net cash generated from
operations for the full year was £74.3 million representing growth of 119%
compared the prior year (FY22: £34.0m) and the Group continued to deliver
strong cash conversion of 90% for the full year. The cash we generate is
redeployed into bolt-on M&A activity whilst maintaining our leverage
within our target range, and this strategy coupled with our consistently
strong organic growth creates highly attractive returns.
At 31 March 2023 adjusted net debt was £160.8 million (31 March 2022: £108.8
million), excluding lease liabilities of £28.1 million (31 March 2022:
£24.5million), and the net debt/run-rate adjusted EBITDA gearing ratio of
just below 2.0x was within our target range of 1.5x to 2.5x.
A year of record organic growth
We delivered excellent organic growth of 10% in the year, significantly ahead
of the market, demonstrating the resilience and attractions of our business
model and markets. We provide market leading compliance services and software
products to clients: client lifetime value is growing and our ability to up
and cross-sell across our broad range of capabilities is complementing our
strong levels of new business. We have successfully used price to pass through
the manageable cost inflation that we have seen onto our customers, allowing
us to protect our margins.
We occupy markets that are undergoing attractive structural growth. Businesses
require our advice, support and SaaS products to understand which regulations
are relevant to their employees, their organisations and the safety of their
business premises. Our compliance intelligence SaaS products, including
Barbour and Cedrec, provide this understanding. Our Health & Safety
consultants and Employment Lawyers deliver the retained advice that our
clients rely on and our compliance eLearning products train their staff in
critical regulations. Our clients then require our professional expertise in
order to adhere to these complex regulations which we deliver on a recurring
and contracted basis alongside the assurance, health surveillance or safety
inspections they are required to carry out to ensure they remain compliant on
an ongoing basis. All of these regulatory challenges can be simplified and
controlled by one of our risk management SaaS products such as Corestream,
Meridian or Omnitrack and we continue to benefit from the ongoing transition
towards digital methods of risk management. Regulation and legislation are
constantly evolving and becoming more onerous, and these changes, coupled with
an increasing enforcement burden, continue to drive growth across our markets.
Our comprehensive proposition keeps our customers compliant in this stringent
regulatory environment and ensures that their workforce and organisations
remain healthy, safe and efficient.
Across our markets we are seeing a heightened focus on ESG issues inherent in
business with public and corporate expectations around safety, compliance and
governance on the rise. Alongside this, there is a greater internal focus on
employee health & wellbeing with an estimated £90 billion+ being lost
through absence and presenteeism in the UK alone.
We build upon these structural tailwinds through both the cross-sell and
up-sell of services and software across our business lines. The same
individual in our clients' organisations is often responsible for several
compliance areas, whether it be Head of Risk, a Health & Safety Director,
an HR Director, or an SME business operator. For example, the person
responsible for procuring fire safety services is often also responsible for
procuring water & air hygiene services and health & safety software.
Similarly, if an individual is responsible for procuring risk management
software, they are also likely be responsible for procuring occupational
health, HR and employment law services, compliance eLearning or HR compliance
software. Through providing best-in-class services we can leverage this common
channel to market allowing us to cross-sell and up-sell both services and
software to one of our existing ~50,000 customers. Cross-sell contributes in
the region of 2% to our organic growth each year and is part of the reason we
are able to grow faster than our wider markets.
Software also acts a key differentiator in our markets. Providing compliance
software either as a standalone product or bundled alongside our services
allows us to provide a more comprehensive end-to-end compliance solution. Our
consultancy & advisory services help our clients to understand and audit
their compliance obligations which can then be tracked, managed and controlled
via our software. We find clients who take both software and service from our
Group achieve much higher standards of compliance. Software now generates over
£43 million of ARR which we expect to continue to grow organically at a fast
pace. These SaaS revenues are generated through recurring monthly SaaS
subscriptions, typically as part of multi-year contracts and we continue to
achieve customer net retention rates consistently over 100%.
On a run-rate basis our Group now has revenue of over £500 million,
surpassing our FY24 revenue target, and this scale provides a number of
competitive advantages. Due to our extensive range of capabilities and
geographic coverage, we are uniquely positioned to serve both small and large,
multi-site and complex clients right across their compliance requirements,
nationwide. Additionally, collaboration between our in-house expertise of over
130 software developers and some 3,500 fee-earning compliance specialists
allows us to continually improve our service and software and bring new
software innovations to market.
Resilient business model
The software and services Marlowe provide are underpinned by regulation and
are therefore predominantly non-discretionary and essential throughout the
economic cycle. For example, the Health & Safety Act requires a health
& safety risk assessment to be completed and recorded by a competent
person if a business has five or more employees. Additionally, employees must
be provided with adequate health & safety training which can be conducted
via our compliance eLearning offering. The cost of non-compliance is
significant including large fines with the average Health & Safety fine
increasing over 300% since 2018. Non-compliance can also result in increased
insurance premiums and, for the most serious offences, prosecution or even
imprisonment. This non-discretionary nature of our services and software leads
to a high degree of revenue visibility with approximately 85% recurring and
secured via long-term contracts.
The impact of inflation, largely related to wages, has been mitigated through
inflationary linked contract agreements or via annual increased contract
pricing. We remain confident in our ability to pass through future costs
increases in this way. Our software and service offerings are a relatively
small cost for our customers and are often linked to their compliance budgets,
which tend to be ring-fenced given the major potential costs associated with
non-compliance. This, coupled with our high levels of service and technology
benefits, results in deep and durable customer relationships, with an average
duration of over 12 years.
The Group has low customer concentration and works across a broad range of
sectors. We serve ~50,000 B2B customers from SMEs to large multinationals or
public sector organisations, with no customer representing more than 2% of
revenues. Within GRC, customers largely pay for our services and software in
advance as a monthly subscription and are usually committed to 3 or 5 year
contracts. In TIC, we are paid monthly in arrears as part of similarly
long-term contracts.
Disciplined approach to M&A
During FY23, the Group successfully completed 11 bolt-on acquisitions for a
total consideration of £56 million with ten acquisitions in the first half
and one in the second half alongside a continued focus on integration
projects. We have deepened our presence across GRC in compliance software,
employment law & HR, occupational health and within TIC compliance
services. We have subsequently deployed £15.3 million on four bolt-on
acquisitions post year end within our TIC business.
Acquisition has been a key tool that we have used to build the scale that we
enjoy across our markets. We have a top-3 position in each of the compliance
markets we occupy yet they remain highly fragmented with our £505 million
run-rate revenue indicating we only serve c.6% of our £8.6 billion
addressable market. The opportunities for future growth via market
consolidation are very significant.
We have a well-designed divisional structure to support growth via M&A and
integration. We possess a strong in-house corporate development capabilities
which enable us to source deals, conduct due-diligence and efficiently execute
upon our acquisition strategy. This agility, resource and expertise allows us
to capitalise on acquisitions that our peers and competitors would struggle to
replicate and we are seen as an attractive acquiror across our markets. Over
70% of the deals completed are off-market allowing us to achieve attractive
valuations and unlock deals that are a targeted fit with our strategic
criteria.
We have a well-developed pipeline of earnings enhancing bolt-on acquisitions
which we expect to selectively capitalise on during the course of FY24 and
beyond, both through reinvesting the increasing level of cash that we generate
and through an appropriate use of our balance sheet.
Strengthening and integrating
The investments we make in integration and acquisition-related restructuring
are a vital element of our strategy for growth and are essential to generate
the returns on investment that we do. It is thanks to the successful delivery
of these integration programmes that we have been able to accelerate our
organic growth rate from 4% in FY17 to 10% in FY23 and increase our adjusted
divisional EBITDA margin from 16% in FY17 to over 19% today.
During the year, we have placed a particular emphasis on integration, building
upon the intensively active and successful growth period we delivered during
FY22, where we deployed over £320 million of capital across 20 acquisitions.
We have made significant progress with the integration programme in
Occupational Health following the acquisition of Optima for £135 million in
January 2022, TP Health in April 2022 and our existing Healthwork occupational
health activities. We successfully established a unified management team,
streamlined our back-office operations, and implemented a single operating
model across the combined business. The entire merged business now operates
under the Optima brand. In eLearning we have completed the integration of five
eLearning platforms into VinciWorks with a single compliance content library
and software environment now in place, supported by a fully integrated
management and support team. Both these integration programmes have delivered
highly attractive cost synergies via the removal of duplicated headcount, IT
systems and properties.
Our well-designed organisational structure, which prioritises divisional
autonomy and agility, has been instrumental in enabling us to successfully
pursue our growth strategy, which combines organic growth with bolt-on
acquisitions. With a siloed approach to integration, our six entrepreneurial
management teams have been able to remain focused on driving organic growth
while also directing and overseeing their integration initiatives. Significant
investments have been made in dedicated integration resource to ensure we
deliver these programmes efficiently.
This structure enables us to integrate acquired businesses simultaneously
across business lines, with an integration programme for one acquisition being
largely discrete from another. This approach has allowed us to maintain the
necessary bandwidth to continue pursuing strategic acquisitions and also to
position us well for sustained inorganic growth.
As we continue to pursue a balanced blend of organic and inorganic growth this
investment in integration is driving our long-term shareholder returns.
Outlook
We expect to see strong continued demand for our software and services. We
operate in resilient markets that are undergoing structural growth, and we
have consistently exceeded that growth organically through the delivery of our
business model and the application of our organic initiatives.
Our businesses are highly cash generative, and increasingly so, which now
allows us to successfully execute our bolt-on acquisition strategy from
self-generated resources and we remain well positioned to benefit selectively
from executing upon the opportunities within our pipeline.
We have made a positive start to the new financial year, with strong levels of
organic growth. We have completed a further four bolt-on acquisitions post
year-end deploying £15.3 million of capital. Our acquisition pipeline is
well-developed, and we expect to use our attractive cash-flow characteristics
to selectively execute upon these opportunities whilst appropriately managing
leverage
Governance, Risk & Compliance
Our GRC consulting and software solutions help our customers mitigate business
risk and ensure legally compliant governance standards. We operate across
Health & Safety, Employment Law & HR, Occupational Health, Enterprise
Risk Management and eLearning. The majority of the compliance services we
deliver revolve around our clients' employee and organisational risks.
FY23 FY22 Change
£m £m
Revenue 193.1 94.2 105%
Adjusted EBITDA(1,2) 51.5 28.4 81%
Adjusted operating profit(2) 44.7 25.4 76%
Adjusted EBITDA margin(1,2) 26.7% 30.1% (340)bps
(1 ) Earnings before interest, taxes, depreciation and amortisation
("EBITDA")
(2) Explanation of non-IFRS measures are contained within the Chief Financial
Officer's review
Financial Review
Our GRC division performed well during FY23, with revenue increasing 105% to
£193.1 million (FY22: £94.2 million). This reflected strong organic growth
of 8% and the benefit from acquisitions completed in the year, together with
the full year contribution of acquisitions made in the prior year. Organic
growth was driven by new business, up-selling to existing customers,
cross-selling and price increases via inflationary linked contracts or annual
renegotiations. The vast majority of GRC revenues are delivered as multiyear
contracts, retained consultancy subscriptions or as SaaS subscriptions.
Adjusted EBITDA increased by 81% to £51.5 million (FY22: £28.4 million), as
we benefited from organic growth, operational improvements and integration
synergies. Adjusted EBITDA margin was 26.7% (FY22 30.1%). This reflects
business mix following significant acquisitions in Occupational Health in the
latter end of FY22 and the beginning of FY23, which as expected, operates at a
lower margin than the rest of the GRC business lines. Excluding the impact of
Occupational Health acquisitions, GRC margins increased materially,
particularly within compliance software. This margin expansion, which we
expect to continue in the current financial year, is on the back of
integration efficiencies, operational gearing and successful pricing
strategies.
Operational review
We made good progress during FY23 following on from the successful growth
period in FY22 where we deployed c.£300 million over 11 acquisitions within
GRC. This was a very active period for the Group and successful integration
was a vital component to ensure we deliver integration synergies, enhance our
returns on invested capital and can drive continued future growth. During the
year we undertook two significant integration projects within GRC alongside
embedding smaller bolt-on acquisitions. Within Occupational Health, we have
made significant progress in consolidating all of the occupational health
acquisitions into the Optima platform. Similarly, within Compliance eLearning,
we have brought all five of our compliance eLearning businesses under
VinciWorks.
During the year we made six acquisitions deploying £39 million of capital as
we deepened our presence across HR & Employment Law and Occupational
Health. This included the £23 million acquisition of TP Health in April 2022.
Compliance Software which includes compliance eLearning, Enterprise Risk
Management solutions (EHS, GRC, HR & Contractor Risk) and regulatory data
and information, performed well in the year. We delivered strong margin
enhancements as we executed on integration plans, and we continued to drive
organic growth in the high single digits. We expect to materially accelerate
this in the coming year as we benefit from the revenues synergies that we have
created following the merging of our eLearning and regulatory intelligence
(Barbour & Cedrec) businesses.
Our Employment Law, HR and Health & Safety business stream represents
around a quarter of total GRC revenues. We saw mid to high single digit
organic revenue growth in our Employment Law & HR businesses, reflecting
new customer growth and the successful implementation of price increases with
existing customers. We continued to drive margins as we more efficiently
triage staff through our case management software, CaseNest, which has, since
implementation, resulted in a c.20% decrease in the number of specialists
required to service the same volume of case work. Health & Safety customer
attrition was slightly higher than targeted towards the end of FY22 which was
reflected in FY23 revenues but has since normalised. Additionally, we
experienced a more challenging labour market within some of our Health &
Safety businesses at the start of the financial year, but this has now trended
back to a more normalised level.
Occupational Health has undergone a transformational year following the
acquisition of Optima Health in January 2022 and TP Health in April 2022. We
are of a scale now where we can leverage our extensive capabilities to service
national and complex customers. Additionally, we are benefiting from knowledge
sharing across our portfolio that allows us to ensure each client has the most
comprehensive and effective package to meet their employee health, well-being
and compliance needs. We saw high single digit organic revenue growth in the
year, driven by both new business and also the upselling of additional
services across our range of corporate health & wellbeing services.
Testing, Inspection & Certification
The services we provide within our Testing, Inspection and Certification (TIC)
division largely revolve around keeping our customers business premises safe
and compliant with relevant regulation and legislation. Our services address
compliance requirements across fire safety & security, and water & air
hygiene.
FY23 FY22 Change
£m £m
Revenue 272.6 221.7 23%
Adjusted EBITDA(1,)(2) 36.8 30.6 20%
Adjusted operating profit(2) 25.6 21.4 20%
Adjusted EBITDA margin(1,)(2) 13.5% 13.8% (30)bps
(1) Earnings before interest, taxes, depreciation and amortisation ("EBITDA")
(2) Explanation of non-IFRS measures are contained within the Chief Financial
Officer's review
Financial Review
TIC performed strongly in FY23, with revenues increasing 23% to £272.6
million (FY22: £221.7 million). We delivered strong organic growth of 11%,
reflecting above-market growth within Water & Air Hygiene and particularly
strong growth within our Fire Safety & Security business. Our performance
also benefited from acquisitions completed in the year, together with the full
year contribution of acquisitions made in the prior year. Approximately 80% of
our revenues within TIC are recurring and typically delivered via 3-5 year
contracts. We are delivering excellent service standards across TIC with
compliance KPI's of close to 100%. These high levels of service result in
reduced client attrition, increased client share of wallet and enhanced
organic growth rates. Organic growth was also driven by new business and
up-selling as we leverage our significant national scale and breadth of
compliance capabilities across our clients range of requirements, both of
which provide significant competitive advantage in winning business across our
target client base and in particular with larger complex and multi-site
clients. These types of clients demand best in class delivery capabilities
with efficient service right across the UK and a breadth of technical
capability to address all of their property safety & compliance needs,
supported by a well-invested operating model and technology. We differentiate
ourselves from the market in this way and believe we will continue winning
market share and outpacing market growth as a result. Cross-sell between our
Fire Safety & Security and Water & Air Hygiene business lines, which
share the same channel to market, continues to accelerate our organic growth
and generated around £6 million of incremental revenue growth during the
year.
Adjusted EBITDA was up 20% to £36.8 million (FY22: £30.6 million) as a
result of organic growth and further operational improvements, acquisitions
and integration synergies. Adjusted EBITDA margins remained materially in line
year-on-year. Underlying organic margin improvement due to scale and
integration efficiencies, was offset by lower margins on business acquired in
FY22. As we have scaled our TIC business, we continue to benefit from improved
route density which allows us to increase revenue per day per fee earner and
decrease travel time between client sites as a result of our proximity to our
clients. This density results in both improved client service standards and
enhanced revenue and profitability.
We expect to continue benefiting significantly from the major investments that
we have made in building out our platform infrastructure and systems over the
past seven years as we can support additional revenues more efficiently, both
organically and via our continued bolt-on M&A programme. Following 50
acquisitions since 2016 and consistent organic growth, our TIC business is now
by some margin the largest provider of property safety and compliance services
across the UK. We believe that this scale and integration expertise places us
in a uniquely strong position to continue consolidating the fragmented market
in which we operate. As the acquiror of choice in the market, we are able to
source attractive bolt-ons that fit our criteria amidst the numerous available
M&A targets in our pipeline at sensible valuations. Now that our platform
is well established we believe that we are primed to accelerate this growth
with increasingly attractive integration synergies and economies of scale. The
returns on capital employed that we are generating in TIC of 22% clearly
demonstrate that this model is highly effective at generating economic value.
Operational Review
Fire Safety & Security has continued to deliver very impressive growth in
the year, significantly above market rate. Our strong focus on achieving
best-in-class compliance rates has resulted in low attrition rates throughout
our customer base and subsequently this customer goodwill allows us to upsell
additional services, increasing each individual customer spend. An example of
our additional capabilities is the expansion into the fast-growth
passive-fire(2) services segment of the market where we have delivered very
strong growth in the year.
A key accelerator of growth has been through our increasing ability to service
complex and multi-site customers. We can effectively displace competitors who
struggle to achieve a similar compliance service levels or lack our breadth of
service capabilities.
We have completed three bolt-on acquisitions in the year. The integration of
these acquisitions is largely completed and the businesses are trading in-line
with pre-acquisition expectations. Since the year-end we have completed a
further four acquisitions, including the leading national service provider
Clymac Fire & Security which has contributed around £12 million of
additional revenues, as we deepen and strengthen our presence in this market
and further build our route density.
2 Passive fire protection is a barrier or shield, stopping the spread of fire
from one area to another
Water & Air Hygiene has seen above-market organic revenue growth as we
have leveraged our leading sales and account management teams and placed a
focus on upselling capabilities to larger and more complex customers.
During the year we undertook a large integration project as we have rolled out
our new end-to-end ERP system, Wave. This system handles all of our water
operations and allows us to schedule our specialist technicians more
effectively, operate our back-office processes more efficiently and provide
access to richer, more valuable compliance data to our clients via automated
portals, helping them to effectively reduce risk. Additionally, the
integration of the £30 million Hydro-X acquisition is now largely complete
following its major integration programme into the WCS infrastructure and
operating model.
We completed two bolt-on acquisitions in the year, including the £9m
acquisition of PCS in February 2023, as we deepen and strengthen our position
in the Air Hygiene market. The integration of these acquisitions is on track
and the businesses are performing in-line with expectations.
Chief Financial Officer's Review
Revenue grew in the year to £465.7 million (FY22: £315.9 million). The
increase reflects continued strong organic growth of 10% and the contribution
from acquisitions completed in the year together with the full year benefit of
those completed in FY22. The largest of these was the acquisition of Optima
Health in January 2022 which had annualised revenues of £66 million at the
point of acquisition. Organic revenue growth % on a like-for-like basis is
defined as the year-on-year growth of our entire business. This includes the
growth or decline of acquisitions from the day of completion, by including
their performance from the corresponding prior period. The benefit of this
approach is that it provides insight as to how recently acquired businesses,
along with our existing business, are performing organically.
Adjusted operating profit increased by 53% to £64.3 million (FY22: £42.0
million) and adjusted EBITDA increased by 52% to £82.7 million (FY22: £54.4
million). Adjusted EBITDA means operating profit before interest, tax,
depreciation and amortisation and excludes separately disclosed acquisition
and other costs. Group divisional adjusted EBITDA margin increased to 19.0%
from 18.7% in FY22. The increase in margin has been primarily driven by the
increase in size of the higher margin GRC division. Statutory operating profit
was £6.4 million (FY22: £10.5 million) with the reduction representing a
significant £10.6 million increase in investment in integration projects
during the year, a £9.1 million increase in non-cash amortisation charges
resulting from a higher carrying value of intangible assets and a £10.2
million increase in provisions for contingent consideration payments due to
the strong performance of certain acquired businesses.
Adjusted profit before tax was £53.6 million (FY22: £38.1 million). On a
statutory basis loss before tax for the year was £6.9 million compared to a
profit before tax of £5.9 million in FY22 with the movement being driven by
the same factors noted under statutory operating profit combined with higher
finance costs on the Group's debt facilities resulting from higher base rates
of interest.
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 Annual Report and 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 EBITDA and adjusted measures of operating
profit, profit before tax and earnings per share 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:
Continuing operations FY23 FY22
£m £m
Operating profit 6.4 10.5
Amortisation of acquisition intangibles 24.0 14.9
Depreciation and amortisation of non-acquisition intangibles 18.4 12.4
EBITDA 48.8 37.8
A reconciliation between statutory profit and the adjusted performance
measures noted above is shown below:
(Loss)/profit before tax Operating profit EBITDA
£m £m £m
Statutory reported (6.9) 6.4 48.8
Acquisition costs 2.7 2.7 2.7
Restructuring costs 21.1 21.1 21.1
Amortisation of acquisition intangibles 24.0 24.0 -
Share-based payments (excluding SAYE schemes) 1.7 1.7 1.7
Fair value losses in contingent consideration and acquisition related 8.4 8.4 8.4
incentive schemes
Exceptional finance costs 2.6 - -
Adjusted results 53.6 64.3 82.7
Acquisition and other costs
Acquisition and other costs totalled £2.7 million in the year (FY22:
£6.0million).
Acquisition costs include legal fees, professional fees and staff costs
incurred as part of the acquisitions. They have reduced during the year due to
the lower level of M&A activity.
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. We are now delivering a total
pre-tax return on invested capital(3) of 14%, close to our 15% target.
Restructuring costs for the year were £21.1 million (FY21: £10.5 million).
The increase reflects the significant scale of integration programmes
conducted in year following the large amount of capital deployed in FY22 of
(£314 million of initial capital deployed in FY22 as compared to £41 million
deployed in FY21. Ongoing integration programmes are on track and are expected
to be largely complete midway through FY24 with the exception of recently
completed M&A. The current integration resource will either leave on
completion of the relevant integration programme or transfer onto another
integration programme. Once started typical integration programmes take one
year to complete, although this is often shorter for smaller bolt on
businesses. Restructuring costs primarily consist of:
· Costs incurred recruiting and making employees redundant
post-acquisition, and cost of duplicated staff roles during the integration
period;
· Costs incurred in managing the integration process; 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.
(3)Pre tax-return on invested capital is calculated on run-rate EBITDA
excluding head office costs over the summation of initial capital deployed,
restructuring costs, acquisition costs and deferred consideration.
Amortisation of acquired intangible assets for the year was £24.0 million
(FY22: £14.9 million) with the increase attributable to the higher carrying
value of intangible assets resulting from the continued execution of the
Group's M&A strategy.
Non-cash share-based payment charges for the year were £1.7 million (FY22:
£1.9 million) and largely represent the charge for the Executive Incentive
Plan.
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, we consider the charge
associated with these schemes to be similar in nature as "Acquisition and
other costs" as we continue to execute our stated strategy. The total charge
for these schemes and for movements in deferred consideration
provisions during the year totalled £8.4 million (FY22: £1.8 million
releases) with approximately half the movement resulting from an increase in
the provision for the Corestream earn following revised forecast expectations.
Exceptional finance costs for the year were £2.6 million (FY22: £0.7
million) and relate to the non-cash unwinding of the discount applied to
contingent consideration to reflect the time value of money. In the prior year
exceptional finance costs reflected the write down of prepaid arrangement fees
on Marlowe's previous debt facility upon its increase and extension in
February 2022.
Further details on the items considered when arriving at adjusted performance
measures can be found in Note 3.
Further details behind our approach to the treatment of acquisition and other
costs can be found in note 3.
Earnings per share
Basic adjusted earnings per share are calculated as adjusted profit 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) FY23 FY22
Basic adjusted earnings per share 45.3p 37.7p
Basic (loss)/earnings per share (3.9)p 0.8p
*Refer to note 5
Interest
Finance costs, excluding exceptional finance costs, amounted to £10.7 million
in the year (FY22: £3.9 million). This movement reflects the increased costs
of borrowing driven by SONIA and higher levels of utilisation of the Group's
enlarged debt facilities following a refinancing in February 2022. The BoE
base rate at the start of the financial year was 0.75% and increased by 3.5%
during the year. The increased cost of debt is being factored into our ongoing
M&A strategy.
Taxation
UK Corporation Tax is calculated at 19% (FY22: 19%) of the estimated
assessable profit for the year. In addition, deferred taxes at the statement
of financial position date were remeasured to reflect the 25% tax rate from 1
April 2023.
Statement of financial position
The Group maintains a strong balance sheet with net assets as at 31 March 2023
of £443.3 million (31 March 2022: £446.0 million. At the same date total
assets were £851.4 million (2022: £791.2 million), and total liabilities
were £408.1 million (2022: £345.2 million). Total assets primarily consisted
of intangible assets of £644.1 million and trade and other receivable of
£116.4 million. Total liabilities include bank loans of £191.0 million and
trade and other payables of £123.2 million.
Cash flow
The Group benefits from revenues which have beneficial underlying working
capital characteristics. As a result, working capital as a % of run-rate
revenue at the full year was 2%.
Across the whole year net cash generated from operations was £74.3 million
(FY22 £34.0 million) an increase of 119%. Free cash flow conversion in the
year was 90%, in line with our medium-term target. Operating cash flows in
FY22 were affected by the normalisation of working capital following a COIVD
affected FY21.
We have delivered a strong cash performance in the second half of the year and
as guided the short-term increase in accrued income in the TIC division at 30
September 2022 has returned to levels comparable with that seen at the
beginning of the financial year. The increase in the first half relates to
working capital requirements from billing cycles which included the
implementation of a new operating and billing system in our Water & Air
Hygiene business and short-term delays to billing on project work in our Fire
and Security business.
We have also made strong progress in reducing debtor days in the final quarter
after they came under pressure at the start of the second half of the year.
The net result is that cash generation in the second half increased materially
with net cash generated from operations of £51.7 million in the six months
and cash conversion of 127%.
FY23 FY22
£m £m
Adjusted operating profit 64.3 42.0
Net cash generated from operations 74.3 34.0
Acquisition and restructuring costs (23.8) (16.5)
Interest (8.6) (2.6)
Tax (8.3) (6.3)
Net cash after restructuring, interest and tax 33.6 8.6
Net cash from operations (after capex) 57.9 24.9
Free cash flow conversion % 90% 59%
Capital expenditure totalled £16.4 million (FY22: £9.1 million) reflecting
the increased scale of the Group and further investment in our software
systems and ongoing investment in our businesses. Roughly two thirds of
capital expenditure is related to software.
Net debt and financing
Net debt as at 31 March 2023, including inter alia £28.1 million of lease
liabilities, was £188.9 million (FY22: £133.3 million). Adjusted net debt
(excluding lease liabilities) at year end was £160.8 million (FY22: £108.8
million).
The increase reflects the successful execution of the M&A strategy with
£56 million deployed in the year and over £20 million of deferred
consideration settled which has been offset by strong cash generation,
particularly in the second half of the year.
Group run-rate leverage (excluding leases) ratio was just below 2x as at 31
March 2023 (2.1x as at 30 September 2022), within our target range of 1.5x to
2.5x.
In February 2022 the Group announced a new £180 million, 3-year, RCF facility
which extended the lending syndicate to a total of six lenders and included a
£60 million optional accordion facility.
In October 2022 the Group exercised £53.3 million of the accordion facility
through the support of the existing syndicate. As a result, the Group remains
well-funded and continues to have sufficient resources, including headroom on
its financing facility, to meet the needs of the Group and to fund
acquisitions as part of its strategy.
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 year ended 31 March 2023
Notes Year ended 31 March 2023 Year ended 31 March 2022
£m £m
Revenue 2 465.7 315.9
Cost of sales (276.7) (176.7)
Gross profit 189.0 139.2
Administrative expenses excluding acquisition and other costs (124.7) (97.2)
Acquisition costs 3 (2.7) (6.0)
Restructuring costs 3 (21.1) (10.5)
Amortisation of acquisition intangibles 3 (24.0) (14.9)
Share based payments (excluding SAYE schemes) and 3 (1.7) (1.9)
legacy long-term incentives
Fair value gains/(losses) in contingent consideration and acquisition related 3 (8.4) 1.8
incentive schemes
Total administrative expenses (182.6) (128.7)
Operating profit 6.4 10.5
Exceptional finance costs 3 (2.6) (0.7)
Net finance costs (10.7) (3.9)
Total finance costs (13.3) (4.6)
(Loss)/profit before tax (6.9) 5.9
Income tax credit / (charge) 4 3.1 (5.2)
(Loss)/profit for the year (3.8) 0.7
Other comprehensive income - -
(Expense)/income and total comprehensive (loss)/profit for the year from (3.8) 0.7
continuing operations
Attributable to owners of the parent (3.8) 0.7
(Loss)/earnings per share attributable to owners of the parent (pence)
Total
Basic 5 (3.9)p 0.8p
Diluted 5 (3.9)p 0.8p
Unaudited Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Share capital Share premium Merger Other reserves Retained earnings £m Total equity
£m £m Reserve £m £m
£m
Balance at 1 April 2021 38.5 217.4 7.9 0.4 (0.8) 263.4
Profit for the period - - - - 0.7 0.7
Total comprehensive income for the year - - - - 0.7 0.7
Transaction with owners
Issue of shares during the year 9.4 171.7 - - - 181.1
Issue costs - (4.3) - - - (4.3)
Acquisition - - 2.0 - - 2.0
Share-based payments - - - 1.7 - 1.7
Deferred tax on share-based payments - - - 1.4 - 1.4
9.4 167.4 2.0 3.1 - 181.9
Balance at 31 March 2022 47.9 384.8 9.9 3.5 (0.1) 446.0
Loss for the period - - - - (3.8) (3.8)
Total comprehensive loss for the year - - - - (3.8) (3.8)
Transaction with owners
Share-based payments - - - 2.3 - 2.3
Deferred tax on share-based payments - - - (1.2) - (1.2)
- - - 1.1 - 1.1
Balance at 31 March 2023 47.9 384.8 9.9 4.6 (3.9) 443.3
Unaudited Consolidated Statement of Financial Position
As at 31 March 2023
Notes Year ended 31 March 2023 Year ended
£m 31 March 2022
£m
ASSETS
Non-current assets
Intangible assets 8 644.1 609.5
Property, plant and equipment 11.7 12.1
Right of use assets 27.4 24.1
Trade and other receivables 4.8 4.7
Deferred tax asset 4.4 3.9
692.4 654.3
Current assets
Inventories 9.3 7.6
Trade and other receivables 9 116.4 98.1
Held for sale property 1.3 -
Cash and cash equivalents 30.2 31.2
Current tax asset 1.8 -
159.0 136.9
Total assets 851.4 791.2
LIABILITIES
Current liabilities
Trade and other payables (123.2) (111.5)
Financial liabilities - lease liabilities (9.7) (8.0)
Current tax liabilities - (1.2)
Provisions (1.4) (0.9)
(134.3) (121.6)
Non-current liabilities
Trade and other payables 10 (12.0) (14.7)
Financial liabilities - borrowings 12 (191.0) (140.0)
Financial liabilities - lease liabilities (18.4) (16.5)
Deferred tax liabilities (51.2) (50.5)
Provisions (1.2) (1.9)
(273.8) (223.6)
Total liabilities (408.1) (345.2)
Net assets 443.3 446.0
EQUITY
Share capital 13 47.9 47.9
Share premium account 13 384.8 384.8
Merger relief reserve 13 9.9 9.9
Other reserves 4.6 3.5
Retained earnings (3.9) (0.1)
Equity attributable to owners of parent 443.3 446.0
Unaudited Consolidated Statement of Cash Flows
For the year ended 31 March 2023
Notes Year ended 31 March 2023 Year ended 31 March 2022
£m £m
Net cash generated from operations 14 74.3 34.0
Net finance costs (8.6) (2.6)
Income taxes paid (8.3) (6.3)
Net cash generated from operating activities before acquisition and 57.4 25.1
restructuring costs
Acquisition and restructuring costs (23.8) (16.5)
Net cash generated from operating activities 33.6 8.6
Cash flows used in investing activities
Purchases of property, plant and equipment and non-acquisition intangibles (16.4) (9.1)
Disposal of property, plant and equipment 1.4 1.1
Purchase of subsidiary undertakings net of cash acquired (59.0) (316.0)
Cash flows used in investing activities (74.0) (324.0)
Cash flows from financing activities
Proceeds from share issues - 181.0
Repayment of borrowings (14.0) (146.5)
Repayment of debt upon purchase of subsidiary undertaking (0.5) (5.4)
New bank loans raised 65.0 286.5
Cost of share issues - (4.3)
Lease repayments (including interest) (11.1) (8.9)
Net cash generated in financing activities 39.4 302.4
Net (decrease)/increase in cash and cash equivalents (1.0) (13.0)
Cash and cash equivalents at start of period 31.2 44.2
Cash and cash equivalents at the end of period 30.2 31.2
Cash and cash equivalents shown above comprise:
Cash at bank 30.2 31.2
Notes to the financial information for the year ended 31 March 2023
For the year ended 31 March 2023
1. Basis of Preparation
Basis of preparation
This preliminary announcement has been prepared in accordance with the
recognition and measurement requirements of UK-adopted international
accounting standards (IFRS) and the Companies Act 2006 and international
financial reporting interpretations committee (IFRIC) interpretations
currently issued and effective.
The financial information for the year ended 31 March 2023 and 31 March 2022
does not constitute statutory financial information as defined in Section 434
of the Companies Act 2006 and does not contain all of the information required
to be disclosed in a full set of IFRS financial statements. Statutory accounts
for the year ended 31 March 2022 have been delivered to the registrar of
companies and those for the year ended 31 March 2023 will be delivered to the
registrar in due course. This announcement was approved by the Board of
Directors and authorised for issue on 28 June 2023. Statutory accounts for the
year ended 31 March 2023 have not yet been reported on by the Group's
Independent Auditor, RSM UK Audit LLP.
The Company's previous auditor reported on the statutory accounts for the year
ended 31 March 2022: their report was unqualified, did not draw attention to
any matters by why of emphasis and did not contain a statement under section
498(2) or (3) of the Companies Act 2006
The consolidated preliminary results are presented in pounds sterling and,
unless stated otherwise, shown in pounds million to one decimal place.
Going concern
The Directors have considered the Group's forecast cash flows and net debt, as
well as the Group's liquidity requirements and borrowing facilities, including
downside scenarios reflecting the full financial impact of a sustained
material event reducing revenues by 10% over the next twelve months. The cash
flow forecasts are based on the current group structure. At the time of
approving the financial statements the Group had an undrawn committed
borrowing facility of £22.3m and to the extent to which further acquisitions
require more than the committed facility they will only be done so following
agreement of the lenders to the use of the accordion facility or once
additional funding has been obtained. Whilst the Group saw some disruption
from COVID-19 during the year ending 31 March 2021, the impact was manageable
and, given the regulations that govern the requirement for its essential
services, the business model has demonstrated resilience. In the event of
further disruption to the business in the future as a result of COVID-19 or an
escalation of the Ukrainian crisis the Directors are confident that additional
cost reduction and cash preservation measures could be utilised in conjunction
with the Group's existing debt facility to reduce costs and preserve cash.
Furthermore, the Group updates its assessment of forward looking headroom on
its covenant position each time there is a change in base interest rates or a
material acquisition is likely to complete. This assessment is used to decide
if any proactive actions are required to ensure covenant compliance. The board
have considered sensitivities which would cause the covenants to be breached
and do not consider there to be a plausible scenario in which this would
occur. For example, based on current forecasts, interest rates would need to
increase by over 200bps for the duration of the next 12 months before any
mitigating actions would need to be taken by the business. Following this
review and a discussion of the sensitivities the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the next twelve months. Thus they continue to adopt the going
concern basis of accounting in preparing the annual financial statements.
2. Segmental analysis
The Group is organised into two main reporting segments, Governance, Risk
& Compliance ("GRC") and Testing, Inspection & Certification ("TIC").
The key profit measures are revenue, adjusted EBITDA and adjusted profit
before tax and are shown before acquisition and restructuring costs,
amortisation of acquisition intangibles, fair value gains/losses in contingent
consideration, and share based payments and legacy long term incentives. 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 acquisition
intangibles, 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 and property, plant and equipment. Segment
assets and liabilities are allocated between segments on an actual basis.
GRC TIC Head Office 2023
Total
Continuing operations £'m £'m £'m £'m
Revenue 195.9 283.5 - 479.4
Inter-segment elimination (2.8) (10.9) - (13.7)
Revenue from external customers 193.1 272.6 - 465.7
Segment adjusted operating profit/(loss) 44.7 25.6 (6.0) 64.3
Acquisition costs (2.7)
Restructuring costs (21.1)
Amortisation of acquisition intangibles (24.0)
Fair value losses in contingent consideration (8.4)
Share based payments (excluding SAYE schemes) and legacy long-term incentives (1.7)
Operating profit 6.4
Exceptional finance costs (2.6)
Net finance costs (10.7)
Loss before tax (6.9)
Tax credit 3.1
Loss after tax (3.8)
Segment assets 119.1 157.2 575.1 851.4
Segment liabilities (60.6) (63.3) (284.2) (408.1)
Capital expenditure (9.7) (6.5) (0.2) (16.4)
Depreciation and amortisation (6.8) (11.2) (24.4) (42.4)
GRC TIC Head 2022
Office Total
Continuing operations £'m £'m £'m £'m
Revenue 94.6 228.5 - 323.1
Inter-segment elimination (0.4) (6.8) - (7.2)
Revenue from external customers 94.2 221.7 - 315.9
Segment adjusted operating profit/(loss) 25.4 21.4 (4.8) 42.0
Acquisition costs (6.0)
Restructuring costs (10.5)
Amortisation of acquisition intangibles (14.9)
Fair value gains/(losses) in contingent consideration 3.5
Share based payments (excluding SAYE schemes) and legacy long-term incentives (3.6)
Operating profit 10.5
Exceptional finance costs (0.7)
Net finance costs (3.9)
Profit before tax 5.9
Tax charge (5.2)
Profit after tax 0.7
Segment assets 116.0 151.1 524.1 791.2
Segment liabilities (48.8) (72.0) (224.4) (345.2)
Capital expenditure (4.9) (4.1) (0.1) (9.1)
Depreciation and amortisation (3.0) (9.2) (15.1) (27.3)
GRC TIC Head Office 2023
Total
£'m £'m £'m £'m
Segment adjusted operating profit/(loss) 44.7 25.6 (6.0) 64.3
Depreciation and amortisation of non-acquisition intangibles 6.8 11.2 0.4 18.4
Adjusted EBITDA 51.5 36.8 (5.6) 82.7
GRC TIC Head Office 2022
Total
£'m £'m £'m £'m
Segment adjusted operating profit/(loss) 25.4 21.4 (4.8) 42.0
Depreciation and amortisation of non-acquisition intangibles 3.0 9.2 0.2 12.4
Adjusted EBITDA 28.4 30.6 (4.6) 54.4
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 year ended 31 March 2023, no customers (2022: nil) individually
accounted for more than 10% of the Group's total revenue.
3. Adjusting items
Due to the nature of acquisitions 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 Directors' view
that these should be included as adjusting items are detailed below:
Adjusting item Rationale
Acquisition costs Acquisition costs include professional fees, transaction costs and staff costs
associated with completing acquisitions. These costs are non-recurring to the
extent that if the Group were to cease further M&A activity these costs
would not continue.
Restructuring costs Restructuring costs include the costs associated with the integration of
acquisitions, include:
· 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.
Each integration programme is distinct and one-off in nature such that when
complete the costs associated that that programme would cease.
Of the £21.1m restructuring costs incurred in FY23, £10.0m will not continue
into FY24. Of the remaining £11.1m, £6.7m relates to costs which are
expected to continue into the FY24 year, but will have ceased by 31 March
2024, with the balance of £4.4m primarily consisting of integration resource
which will either move onto new integration projects or leave the business at
the end of the existing projects.
Amortisation of The amortisation charge for those intangible assets recognised on business
combinations is excluded from the adjusted results of the Group since they are
acquired intangibles volatile between periods based on the timing and extent of acquisitions. As
such, they are removed to provide better comparability of performance between
periods.
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) 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 by the awards.
Fair value gains/ Movements in contingent consideration are considered to be part of the
investing activities of the Group and are therefore not considered to be
(losses) in contingent reflective of the underlying trading performance. Further, share based
compensation expenses are not reflective of the value ultimately received by
Consideration and acquisition related incentive schemes 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 in FY23 relate to the non-cash unwinding of the
discount applied to contingent consideration to reflect the time value of
costs money. In prior year exceptional finance costs reflect the write down of
deferred finance costs associated with the debt facilities which were replaced
in FY22. The requirement to restructure and replace the debt facilities was a
direct result of the acquisitions completed during the year and is therefore
not considered part of the underlying trading of the Group.
In the prior year charges arising on certain long-term incentive schemes
related to prior acquisitions were included within 'Share-based payments and
legacy long-term incentives'. These have been reclassified and are now
included within 'Fair value gains/(losses) in contingent consideration and
acquisition related incentive schemes' to better reflect the nature of these
schemes.
As a result, the 2022 charge for 'Share-based payments and legacy long-term
incentives' has reduced from £3.6m to £1.9m and the 2022 credit for 'Fair
value gains/(losses) in contingent consideration and acquisitions related
incentive schemes' has reduced from £3.5m to £1.8m
4. Taxation
2023 2022
£'m £'m
Current tax:
UK corporation tax on profit for the year 4.0 3.9
Foreign tax 0.4 0.2
Adjustment in respect of previous periods (0.7) (0.1)
Total current tax 3.7 4.0
Deferred tax:
Current year (6.9) (3.3)
Adjustment in respect of previous periods 0.1 0.3
Effect of change in tax rate - 4.2
Total deferred tax (6.8) 1.2
Total tax (credit) / charge (3.1) 5.2
The charge for the year can be reconciled to the profit in the Consolidated
Statement of Comprehensive income as follows:
2023 2022
£'m £'m
(Loss)/profit before tax (6.9) 5.9
(Loss)/profit before tax multiplied by the rate of corporation tax of 19.0% (1.3) 1.1
Effects of:
Expenses not deductible for tax purposes 0.9 0.3
Recognition of previously unrecognised deferred tax assets on losses (1.5) -
Prior year adjustments (0.6) 0.2
Change in tax rates (0.6) 3.6
Tax (credit) / charge (3.1) 5.2
In the Spring Budget 2021, the UK Government announced that the corporation
tax rate would increase to 25% with effect from 1 April 2023. Deferred taxes
at the statement of financial position date have been remeasured at 25% as the
announced change has been enacted.
5. Earnings per ordinary share
Basic earnings per share have been calculated on the profit after tax for the
period and the weighted average number of ordinary shares in issue during the
period.
2023 2022
Weighted average number of shares in issue 95,868,871 81,994,955
Total (loss)/profit after tax for the period £(3.8)m £0.7m
Total basic earnings per ordinary share (pence) (3.9)p 0.8p
Weighted average number of shares in issue 95,868,871 81,994,955
Potential dilution to share options 1,291,637 1,304,678
Weighted average number of shares used in calculating diluted EPS 95,868,871 83,299,633
Total fully diluted (loss)/earnings per share (pence) (3.9)p 0.8p
Potentially dilutive shares have not been included in the diluted EPS for the
year ended 31 March 2023 on the basis that they are anti-dilutive, however
they may become dilutive in future periods
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:
2023 2022
£'m £'m
(Loss)/profit before tax for the period (6.9) 5.9
Adjustments:
Acquisition costs 2.7 6.0
Restructuring costs 21.1 10.5
Amortisation of acquisition intangibles 24.0 14.9
Fair value losses/(gains) in contingent consideration and acquisition related 8.4 (1.8)
incentive schemes
Share based payments (excluding SAYE schemes) 1.7 1.9
Exceptional finance costs 2.6 0.7
Adjusted profit before tax for the period 53.6 38.1
The adjusted earnings per share, based on weighted average number of shares in
issue during the period, is calculated below:
2023 2022
£'m £'m
Adjusted profit before tax (£'m) 53.6 38.1
Tax at 19% (10.2) (7.2)
Adjusted profit after taxation (£'m) 43.4 30.9
Adjusted basic earnings per share (pence) 45.3 37.7
Adjusted fully diluted earnings per share (pence) 44.7 37.1
6. Dividends
The Company has not declared any dividends in respect of the current year or
prior year.
7. Business Combinations
During the year the Group completed 11 acquisitions to create shareholder
value by adding depth and breadth to the Group's compliance based platforms.
If the acquisitions had been completed on the first day of the financial year,
Group revenue would have been £471.6m and Group loss before tax would have
been £7.7m. Post completion, acquisitions made during the year contributed
£32.4m revenue and £6.1m profit before tax. As explained in note 5,
following acquisition a number of restructuring costs are incurred, and after
this post acquisition restructuring the acquisitions have a positive impact on
Group profit before tax.
Goodwill acquired in the business combinations represent a payment made by the
acquirer in anticipation of future economic benefits from assets that are not
capable of being individually identified and separately recognised. Goodwill
is not deductible for tax purposes. Acquisition balance sheets are deemed
provisional when the post-acquisition integration period, typically up to 12
months post-acquisition, has yet to complete.
During the year the Group made the following acquisitions which individually
represent 5 per cent or more of the total Enterprise Value of all acquisitions
made during the year.
Finalisation of fair values for acquisitions acquired in the current year
Acquisition of TP Health (Holdings) Ltd
On 14 April 2022 the Group acquired TP Health (Holdings) Ltd ("TP Health"), a
provider of technology enabled occupational health services for a total
consideration of £22.5m, satisfied by the payment of £14.5m in cash on
completion and £8.0m payable subject to the achievement of certain
performance targets by the acquired business 12 months post acquisition. The
£8.0m payable has been discounted to its present value of £7.2m by applying
the weighted average cost of capital used in the purchase price allocation.
The final fair values are shown below.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 8.5
Intangible assets - application software 2.3
Trade and other receivables 3.2
Cash 1.4
Inventories 0.1
Right of use assets 0.2
Property, plant and equipment 0.5
Trade and other payables (3.3)
Deferred tax liabilities (2.6)
Provisions (0.4)
Leases (0.4)
Tax liabilities (0.2)
Net assets acquired 9.3
Goodwill 12.4
Consideration 21.7
Satisfied by:
Cash to vendors 14.5
Contingent cash consideration to vendors 7.2
One hundred percent of the equity of TP Health was acquired in this
transaction. Deferred tax has been provided on the value of the intangible
assets at the tax rate applicable at the time the asset is expected to be
realised. Acquisition costs of £0.13m have been charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
TP Health would have generated £19.2m revenue and £3.3m profit before tax.
Acquisition of MJ Fire Safety Ltd
On 23 May 2022 the Group acquired MJ Fire Safety Ltd ("MJ Fire"), a provider
of fire safety installation, maintenance and inspection services, for a total
consideration of £4.4m, satisfied by the payment of £4.4m in cash on
completion.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 1.3
Trade and other receivables 0.4
Cash 1.7
Property, plant and equipment 0.3
Trade and other payables (0.2)
Deferred tax liabilities (0.3)
Leases (0.2)
Tax liabilities (0.2)
Net assets acquired 2.8
Goodwill 1.6
Consideration 4.4
Satisfied by:
Cash to vendors 4.4
One hundred percent of the equity of MJ Fire was acquired in this transaction.
Deferred tax has been provided
on the value of the intangible assets at the tax rate applicable at the time
the asset is expected to be realised. Acquisition costs of £0.04m have been
charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
MJ Fire would have generated £3.5m revenue and £0.7m profit before tax.
Acquisition of Cedrec Information Systems Limited
On 24 May 2022 the Group acquired Cedrec Information Systems Limited
("Cedrec"), a digital platform providing Environmental, Health and Safety
("EHS") data and information for a total consideration of £4.2m, satisfied by
the payment of £3.6m in cash on completion and £0.6m payable subject to the
achievement of certain performance targets by the acquired business 12 months
post acquisition.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 1.2
Intangible assets - application software 0.1
Intangible assets - content database 0.2
Trade and other receivables 0.1
Cash 1.2
Right of use assets 0.2
Loan receivable 0.1
Trade and other payables (0.7)
Deferred tax liabilities (0.4)
Leases (0.2)
Tax liabilities (0.1)
Net assets acquired 1.7
Goodwill 2.5
Consideration 4.2
Satisfied by:
Cash to vendors 3.6
Contingent cash consideration to vendors 0.6
One hundred percent of the equity of Cedrec was acquired in this transaction.
Deferred tax has been provided on the value of the intangible assets at the
tax rate applicable at the time the asset is expected to be realised.
Acquisition costs of £0.04m have been charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
Cedrec would have generated £1.6m revenue and £0.5m profit before tax.
Acquisition of Business HR Solutions (Consultancy) Limited and Business Human
Resources Solutions Limited
On 07 June 2022, the Group acquired Business HR Solutions (Consultancy)
Limited and Business Human Resources Solutions Limited (together, "HR
Solutions"), a provider of HR and H&S compliance consultancy services for
a total consideration of £5.8m, satisfied by the payment of £5.8m in cash on
completion.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 3.0
Intangible assets - content database 0.1
Trade and other receivables 0.5
Cash 0.4
Trade and other payables (0.9)
Deferred tax liabilities (0.8)
Borrowings (0.3)
Tax liabilities (0.1)
Net assets acquired 1.9
Goodwill 3.9
Consideration 5.8
Satisfied by:
Cash to vendors 5.8
One hundred percent of the equity of HR Solutions was acquired in this
transaction. Deferred tax has been provided on the value of the intangible
assets at the tax rate applicable at the time the asset is expected to be
realised. Acquisition costs of £0.05m have been charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
HR Solutions would have generated £3.7m revenue and £0.7m profit before tax.
Acquisition of Vista Employer Services Limited
On 15 July 2022 the Group acquired Vista Employer Services Ltd ("Vista"), a
provider of employment law services for a total consideration of £3.9m,
satisfied by the payment of £3.1m in cash on completion and £0.8m payable
subject to the achievement of certain performance targets by the acquired
business 12 months post-acquisition.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 2.1
Trade and other receivables 0.9
Cash 0.3
Trade and other payables (0.8)
Deferred tax liabilities (0.5)
Borrowings (0.2)
Tax liabilities (0.1)
Net assets acquired 1.7
Goodwill 2.2
Consideration 3.9
Satisfied by:
Cash to vendors 3.1
Contingent cash consideration to vendors 0.8
One hundred percent of the equity of Vista was acquired in this transaction.
Deferred tax has been provided on the value of the intangible assets at the
tax rate applicable at the time the asset is expected to be realised.
Acquisition costs of £0.03m have been charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
Vista would have generated £2.3m revenue and £0.4m profit before tax.
Acquisition of PCS Asbestos Consultants Limited
On 01 February 2023 the Group acquired PCS Asbestos Consultants Limited
("PCS"), a provider of asbestos risk management services for a total
consideration of £9.3m, satisfied by the payment of £8.0m in cash on
completion and £1.3m payable subject to the achievement of certain
performance targets by the acquired business 12 months post-acquisition.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 2.1
Intangible assets - application software 0.6
Trade and other receivables 1.2
Cash 2.6
Right of use assets 0.1
Property, plant and equipment 0.2
Loan Receivable 0.4
Trade and other payables (0.4)
Deferred tax liabilities (0.7)
Leases (0.1)
Net assets acquired 6.0
Goodwill 3.3
Consideration 9.3
Satisfied by:
Cash to vendors 8.0
Contingent cash consideration to vendors 1.3
One hundred percent of the equity of PCS was acquired in this transaction.
Deferred tax has been provided on the value of the intangible assets at the
tax rate applicable at the time the asset is expected to be realised.
Acquisition costs of £0.10m have been charged to profit or loss.
If the acquisition had been completed on the first day of the financial year
TP Health would have generated £3.7m revenue and £1.0m profit before tax.
Further to the above the Group has made the following acquisitions which
individually form less than 5% of the total Enterprise Value of all
acquisitions made during the year.
Testing, Inspection and Certification (TIC) acquisitions
The Group has made the following acquisitions in the TIC division:
On 19 April 2022 the Group acquired Ruthven Alarms Limited, a provider of
alarm system installation and maintenance services, for a total consideration
of £0.3m, satisfied by the payment of £0.3m in cash on completion.
On 22 August 2022 the Group acquired Phase Technology 2gen Holdings Limited
("Phase"), a provider of water hygiene & treatment services for a total
consideration of £2.6m, satisfied by the payment of £2.6m in cash on
completion
On 23 September 2022 the Group acquired Icegrade Group Limited (trading as
"MRFS"), a provider of fire alarm and security maintenance services for a
total consideration of £0.7m, satisfied by the payment of £0.7m in cash on
completion.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 1.1
Trade and other receivables 0.5
Cash 1.2
Right of use assets 0.1
Trade and other payables (0.5)
Deferred tax liabilities (0.3)
Leases (0.1)
Net assets acquired 2.0
Goodwill 1.6
Consideration 3.6
Satisfied by:
Cash to vendors 3.6
One hundred percent of the equity was acquired in the transactions with the
exception of MRFS where the Group acquired its business and assets. Deferred
tax has been provided on the value of the intangible assets at the tax rate
applicable at the time the assets is expected to be realised. Acquisition
costs of £0.05m have been charged to profit or loss.
If the acquisitions had been completed on the first day of the financial year
they would have generated £3.0m revenue and £0.5m profit before tax.
Governance, Risk and Compliance (GRC) acquisitions
The Group has made the following acquisitions in the GRC division:
On 09 May 2022, the Group acquired The Compliance Office Ltd, a provider of
SRA consultancy services for a total consideration of £1.5m, satisfied by the
payment of £1.2m in cash on completion and £0.3m payable subject to the
achievement of certain performance targets by the acquired business 12 months
post acquisition.
On 24 August 2022 the Group acquired Care 4 Quality Limited ("C4Q"), a
provider of Health & Social Care Quality Compliance for a total
consideration of £0.6m, satisfied by the payment of £0.6m in cash on
completion.
Fair value
at acquisition
£'m
Intangible assets - customer relationships 0.4
Intangible assets - content database 0.2
Cash 0.4
Trade and other receivables 0.1
Trade and other payables (0.1)
Tax liabilities (0.1)
Net assets acquired 0.9
Goodwill 1.2
Consideration 2.1
Satisfied by:
Cash to vendors 1.8
Contingent cash consideration to vendors 0.3
One hundred percent of the equity was acquired in the transactions. Deferred
tax has been provided on the value of the intangible assets at the tax rate
applicable at the time the assets is expected to be realised. Acquisition
costs of £0.04m have been charged to profit or loss.
If the acquisitions had been completed on the first day of the financial year
they would have generated £1.6m revenue and £0.5m profit before tax.
8. Intangible assets
Goodwill Customer relationships Applications software Content database Trade name Total
£m £m £m £m £m £m
Cost
01-Apr-21 158.2 88.7 12.7 0.0 0.0 259.6
Arising on acquisition of subsidiaries 237.3 96.3 27.2 7.5 6.1 374.4
Additions - - 5.6 - - 5.6
Disposals - - (0.1) - - (0.1)
31-Mar-22 395.5 185.0 45.4 7.5 6.1 639.5
Arising on acquisition of subsidiaries 29.5 19.7 3.0 0.5 - 52.7
Additions - - 9.5 - - 9.5
Disposals (0.3) - - - - (0.3)
31-Mar-23 424.7 204.7 57.9 8.0 6.1 701.4
Accumulated amortisation and impairment
01-Apr-21 - 12.1 1.4 - - 13.5
Charge for the year - 12.2 3.5 0.6 0.2 16.5
31-Mar-22 - 24.3 4.9 0.6 0.2 30.0
Charge for the year - 18.1 7.3 1.3 0.6 27.3
31-Mar-23 - 42.4 12.2 1.9 0.8 57.3
Carrying amount
31-Mar-23 424.7 162.3 45.7 6.1 5.3 644.1
31-Mar-22 395.5 160.7 40.5 6.9 5.9 609.5
9. Trade and other receivables
2023 2022
£'m £'m
Current
Trade receivables 81.9 71.5
Less: provision for impairment of trade receivables (1.9) (2.9)
Trade receivables - net 80.0 68.6
Other receivables 2.8 0.7
Contract assets 2.1 2.2
Accrued income 22.8 18.6
Prepayments 8.1 7.4
Deferred consideration receivable in less than one year 0.6 0.6
116.4 98.1
Non-current
Deferred consideration receivable in more than one year 4.8 4.7
4.8 4.7
As at 31 March 2023, trade and other receivables includes amounts due from
contract assets of £2.1m (2022: £2.2m).
Revenue is recognised based on contracted terms with customers, in accordance
with a contract's stage of completion, with any variable consideration
estimated using the expected value method as constrained if necessary. If a
contract is in dispute, management use their judgement based on evidence and
external expert advice, where appropriate, to estimate the value of accrued
income recoverable on the contract. Actual future outcome may differ from the
estimated value currently held in the financial statements. The outcome of any
amounts subject to dispute is not anticipated to have a material impact on the
financial statements.
Contingent consideration represents 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 £7.0m and additional
amounts receivable on projects concluded before the transaction. These are
financial assets classified as measured at fair value through profit or loss.
The fair value of this consideration is determined using an estimate of
discounted cash flows that are expected to be received within the next five
years. The discount rate used is based on a risk-free rate adjusted for
asset-specific risks. The consideration is subject to a number of variables
which may result in the amount received being materially greater or lower than
currently recognised.
Trade receivables, accrued income and contract assets are provided for based
on, and in accordance with IFRS 9, an expect credit loss ("ECL") model. The
group have utilised a simplified approach which is permitted by the standard,
which applies a credit risk percentage based against receivables that are
grouped in age brackets, which range from 41% of those over 120 days past due
to 5% of those between 0 and 30 days past due.
As at 31 March 2023, the remaining balance of trade receivables which were
past due, after applying the ECL model to the age buckets was £33.5m (2022:
21.1m). No further provision has been recognised on these amounts because it
has been deemed immaterial. These relate to a number of independent customers
with no recent history of default.
10. Trade and other payables
2023 2022
£'m £'m
Current
Trade payables 33.7 29.9
Other taxation and social security 19.9 16.3
Other payables 4.0 2.5
Accruals 28.9 23.5
Deferred income 28.7 25.5
Contingent consideration payable in less than one year 8.0 13.8
123.2 115.0
Non-current
Contingent consideration payable in more than one year 12.0 14.7
12.0 14.7
Trade and other payables principally comprise amounts outstanding for trade
purchases, ongoing costs and contingent consideration. Included within
contingent consideration is £nil (2022: £2.6m) in respect of amounts due
under put and call options. Included within accruals is £8.6m (2022: £4.3m)
in respect of Long Term Incentive Plans.
Contingent consideration consists of the following amounts payable in respect
of previous acquisitions:
2023 2022
£'m £'m
Core Stream 12.0 6.4
VinciWorks 1.8 8.4
Healthworks - 3.0
Skill Boosters 1.5 2.0
Other (comprising 17 acquisitions) 4.7 8.7
20.0 28.5
11. Net debt
2023 2022
£'m £'m
Cash at bank and in hand 30.2 31.2
Bank loans due after one year (191.0) (140.0)
Leases due within one year (9.7) (8.0)
Leases due after one year (18.4) (16.5)
Net (debt) (188.9) (133.3)
12. Financial liabilities - Borrowings
2023 2022
£'m £'m
Current
Bank loans and overdrafts due within one year
Bank loans - unsecured - -
- -
Non-current
Bank loans - unsecured 191.0 140.0
191.0 140.0
13. Called up share capital
2023 2022
Allotted, issued and fully paid: £'m £'m
95,882,065 ordinary shares of 50p each (2022: 95,833,853 ordinary shares of 47.9 47.9
50p each)
No. of shares
31-Mar-21 76,969,849
01 April 2021 - Consideration Shares ("LAW") 153,923
17 August 2021 - Bonus Shares 3,050
20 October 2021 - Subscription Shares 5,512,679
20 January 2022 - Share Options ("SAYE 2020") 1,336
24 January 2022 - Subscription Shares 13,100,000
27 January 2022 - Consideration Shares ("Elogbooks") 93,016
31-Mar-22 95,833,853
11 April 2022 - Share Options ("SAYE 2020") 1,630
26 April 2022 - Share Options ("SAYE 2020") 2,065
23 May 2022 - Share Options ("SAYE 2020") 923
4 July 2022 - Marlowe plc Long Term Incentive Plan 2019 37,879
05 July 2022 - Share Options ("SAYE 2020") 1,173
18 August 2022 - Share Options ("SAYE 2020") 413
19 October 2022 - Share Options ("SAYE 2020") 1,195
24 November 2022 - Share Options ("SAYE 2020") 2,934
31-Mar-23 95,882,065
14. Net cash generated from operations
2023 2022
£'m £'m
Continuing operations
(Loss)/profit before tax (6.9) 5.9
Depreciation of property, plant and equipment and amortisation of 18.4 12.4
non-acquisition intangibles
Amortisation of intangible assets 24.0 14.9
Total finance costs 13.3 4.6
Acquisition costs 2.7 6.0
Fair value gains/(losses) in contingent consideration and acquisition related 8.4 (1.8)
incentive schemes
Restructuring costs 21.1 10.5
Share based payments (excluding SAYE schemes) 1.7 1.9
Increase in inventories (1.7) (2.1)
Increase in trade and other receivables (12.0) (15.0)
Increase/(Decrease) in trade and other payables 5.3 (3.3)
Net cash generated from operations 74.3 34.0
15. Post balance sheet events
Since the year end the Group has acquired 100% interests in several entities,
as set out below, adding an aggregate of £15m of run-rate revenues and £2m
of run rate EBITDA as set out below:
On 06 April 2023 the Group acquired Victory Fire Limited, a UK provider of
fire alarm and extinguishers installation and maintenance services, for a
total consideration of £6.7m, satisfied by the payment of £5.5m in cash on
completion and £1.2m in cash payable subject to the achievement of certain
performance targets by the acquired business 12 months post-acquisition.
On 13 April 2023 the Group acquired Clymac Limited, a UK provider of fire
alarm installation and maintenance services, for a total consideration of
£8.9m, satisfied by the payment of £8.6m in cash on completion and £0.3m in
cash payable subject to the achievement of certain integration targets by the
acquired business 3 months post acquisition.
On 20 April 2023 the Group acquired JCR Security Limited, a UK provider of
specialist smoke ventilation systems maintenance and repair services , for a
total consideration of £0.7m, satisfied by the payment of £0.4m in cash on
completion and £0.3m in cash payable subject to the achievement of certain
performance targets by the acquired business 36 months post-acquisition.
On 13 June 2023 the Company acquired Trans-Fire Holdings Ltd, a UK provider of
fire extinguisher and fire alarm maintenance services, for a total
consideration of £0.9m, satisfied by the payment of £0.8m in cash on
completion and £0.1m in cash payable subject to the achievement of certain
integration targets by the acquired business 6 months post-acquisition.
The fair value of the assets and liabilities in relation to the above
acquisitions have not been presented as, due to them being recent
acquisitions, the work is ongoing to perform the valuations.
16. Related party transactions and key management compensation
No trading related party transactions were identified in the year.
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. END FR FPMBTMTATTPJRecent news on Marlowe
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AnnouncementREG - Marlowe PLC - Holding(s) in Company
AnnouncementREG - Marlowe PLC - Total Voting Rights
AnnouncementREG - AIM - AIM Notice - 30/04/2025
AnnouncementREG - Marlowe PLC - Exercise of Share Options and Total Voting Rights
Announcement