Safety and regulatory compliance specialist Marlowe (MRL) is known for its buy-and-build approach to drive growth. The group made eight acquisitions in the year to 31 March, which helped push adjusted pre-tax profit up almost 50 per cent to £13.2m. Statutory earnings were weighed down by higher administrative expenses and finance costs.
That’s not to say all growth is simply bought in – organic revenue rose by 7 per cent last year, aided by improved customer retention and cross-selling of services. Some 23 per cent of revenue came from customers receiving more than one service, up from 20 per cent a year earlier.
Covid-19 has impeded access to client sites since the March year-end, although Marlowe expects this will abate over the summer. The essential nature of its services – underpinned by regulation – means work cannot be deferred for too long. In response to the pandemic, the group has added new service lines in its ‘health, safety and compliance’ division – including Covid-19 risk assessments and audits – which generated £2m of revenue in the first quarter of this year.
Net debt (excluding lease liabilities) jumped from £20m to £32m last year, although this has since come down thanks to £40m secured from a placing in June. This capital was raised partly to fund the acquisition of management software and services provider Elogbooks, as well as to pursue further M&A.
Broker Stifel anticipates adjusted pre-tax profit will rise to £14.5m this year, although projects EPS will fall to 21.8p, down from 22.9p in 2020.
MARLOWE (MRL) | ||||
ORD PRICE: | 527p | MARKET VALUE: | £ 266m | |
TOUCH: | 524-530p | 12-MONTH HIGH: | 548p | LOW: 316p |
DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
NET ASSET VALUE: | 192p* | NET DEBT: | 48%** |
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 |
2020 | 185 | 0.5 | -0.8 | nil |
% change | +44 | -75 | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes £123m in intangible assets or 244p a share, **Includes £14.3m in lease liabilities |