Marlowe’s (MRL) buy-and-build strategy for UK support services is continuing to pay off. The group completed four deals in the half year to September and another two post period-end, bringing its total to 23 since it listed in April 2016. So far, its approach looks to be delivering. Adjusted pre-tax profits increased by 60 per cent in the period, with related EPS up 41 per cent to 8.8p, with little evidence of dilution despite a placing of 4.21m new shares in July. Indeed, management now expects to outperform market expectations for the full year.
The group focused its acquisitions on the water and air sectors, with the purchase of Suez Water Conditioning in late August, establishing it as major player in UK water treatment, and it is now looking to secure complementary services. Cross-selling group services underpinned a significant proportion of the 5 per cent organic growth rate in the period, but management believes it could drive the multi-service offering by entering the health and safety auditing sector. To aid any future expansion, Marlowe has agreed on a new £30m debt facility which, along with its net cash position, should provide firepower for future deals.
House broker Cenkos upgraded its 2019 adjusted EPS forecast by 18 per cent following the announcement, and now expects 17.9p for the full year (from 14p in 2018).
| MARLOWE (MRL) | ||||
| ORD PRICE: | 434p | MARKET VALUE: | £168m | |
| TOUCH: | 430-438p | 12-MONTH HIGH: | 563p | LOW: 340p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 176p* | NET CASH: | £4.9m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 36.0 | 0.5 | 1.20 | nil |
| 2018 | 56.4 | 0.7 | 1.70 | nil |
| % change | +57 | +40 | +42 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £50.1m, or 129p a share | ||||
