The secret in Marlowe’s (MRL) appeal to investors is the simplicity of its strategy. The group identifies fragmented sectors providing services in regulated areas and quickly builds up a presence, adding scale in the process. Its latest full-year results imply its approach is working well, with adjusted pre-tax profit up more than 70 per cent for the 12 months to March, although acquisition costs and exceptional items have made the statutory numbers look decidedly less appealing (see table).
Nevertheless, there is little sign of the services group slowing down. Despite holding a top four position in each of its key sectors – fire safety and security, water treatment and ventilation – each of these divisions hold a maximum 7 per cent share in each of their markets, which leaves plenty of space for future growth. The cash for future deals is there, too; although Marlowe tipped into a net debt position of £2.9m in these numbers, the company has facilities of £18m should it find bolt-on deals.
On that front, management described last July's acquisition of Ductclean for £9.2m as a key event, opening up lucrative new sectors such as asbestos remediation and ductwork cleaning. The bolt-on acquisitions of SB Hygiene and Forest Environmental should build on Ductclean’s capabilities, geographical reach and client lists.
Broker Cenkos upgraded adjusted EPS expectations by 8 per cent to 16.4p for the year to March 2019, from £7m of pre-tax profit (up from 14p and £5.8m in FY2018).
| MARLOWE (MRL) | ||||
| ORD PRICE: | 410p | MARKET VALUE: | £141m | |
| TOUCH: | 402-418p | 12-MONTH HIGH: | 439p | LOW: 340p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 139p* | NET DEBT: | 6% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 0.0 | -0.1 | -0.9 | nil |
| 2017 | 46.8 | 0.7 | 1.1 | nil |
| 2018 | 80.6 | -0.4 | -2.2 | nil |
| % change | +72 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £42.4m, or 123p a share | ||||
