Marlowe’s (MRL) growth story to date is perhaps bound-up with its buy-and-build strategy. Making eight acquisitions last year, the group increased its scale and capabilities in both ‘risk management and compliance’ and ‘water treatment and air quality’. But in reaching a “critical mass”, organic growth momentum is now building as the group is able to cross-sell services across its divisions. The combined effect saw adjusted cash profits surge by 53 per cent to £11m in FY2019.
Around 20 per cent of revenue is now derived from customers receiving more than one service, increasing to 37 per cent for the top 1,000 customers. This deepening of customer relationships has seen retention rates increase to more than 95 per cent in some cases. The William Martin acquisition has enabled a unique comprehensive end-to-end compliance offering, making it easier to cross-sell services.
Net debt has skyrocketed from £2.9m to £20.1m, however net cash generated from operations has increased by 63 per cent to £5.3m, while underlying operating cash conversion has improved to 83 per cent (from just under 80 per cent).
Cenkos forecasts adjusted pre-tax profit of £12.4m and EPS of 21.6p in March 2020, rising to £14.4m and 26p in FY2021.
| MARLOWE (MRL) | ||||
| ORD PRICE: | 422p | MARKET VALUE: | £194m | |
| TOUCH: | 418-426p | 12-MONTH HIGH: | 563p | LOW: 341p |
| DIVIDEND YIELD: | nil | PE RATIO: | 111 | |
| NET ASSET VALUE: | 169p* | NET DEBT: | 26% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | nil | -0.1 | -0.9 | nil |
| 2017 | 46.8 | 0.7 | 1.1 | nil |
| 2018 | 80.6 | -0.4 | -2.2 | nil |
| 2019 | 129 | 2.0 | 3.8 | nil |
| % change | +59 | - | - | - |
