12 May 2020
Year End Trading Statement and COVID-19 Update
Marlowe plc (“Marlowe” or the “Group“), the specialist services group focused on developing companies which assure safety and regulatory compliance, provides the following trading statement for the financial year ended 31 March 2020 and update on COVID-19.
Trading statement for the year ended 31 March 2020
Marlowe continued to make strong progress in the period, with substantial revenue and profit growth. Revenue for the financial year grew 44% to approximately £185m (2019: £128.5m) with organic growth accelerating to 7% driven by a combination of strong new business sales, improved customer retention and successes with the Group’s cross-selling strategy. The Board expects Adjusted EBITDA for the year ended 31 March 2020 (excluding the effects of the adoption of IFRS 16) to be in line with market expectations and to demonstrate good margin expansion. Following the divestment of non-core air quality activities in March, 12-month run-rate revenues are approximately £200m.
The Group’s financial position is robust and underlying cash generation, before acquisition-related investments remained strong during FY20. Net debt at 31 March 2020 (excluding the effects of the adoption of IFRS 16) was £32.4m, in line with market expectations.
The Group completed eight acquisitions in the year, deepening its presence in existing markets and broadening our safety and compliance capabilities into both HR and employment law compliance and occupational health. The integration of Clearwater, acquired in May 2019, made strong progress during the year, with synergies delivered in line with plan. The Group’s pipeline of earnings-enhancing acquisition opportunities remains buoyant and we see increased opportunities to consolidate our markets going forward.
Marlowe intends to publish its results for the financial year ended 31 March 2020 during the second half of June.
Update on COVID-19
As stated in our update of 31 March 2020, Covid-19 has resulted in some impact on our operations where staff were unable to gain access to certain client sites in order to complete contracted work. However, given the non-discretionary nature of our services – and the key worker designation of Marlowe’s field staff under UK Government guidance – we have continued to operate effectively, whilst implementing enhanced employee safety protocols and taking cost reduction measures to mitigate the impact on profitability and optimise cash flow.
Site access issues have begun to improve in recent weeks and, given the regulations that govern the requirement for our services and ensure that our clients operate safely and compliantly, we expect the majority of works deferred by customers to be recovered in the months ahead. Parts of the Group, including employment law, HR compliance, occupational health and certain water hygiene activities, continue to experience an increased demand for services.
Across the Group Marlowe has tailored its service offering in response to COVID-19 to support our clients. The Group now provides Return to Work audits and COVID-19 risk assessments to ensure workplaces and other premises comply with the latest Government guidance. In addition, we are delivering COVID-19 surface swab testing and fever screening technology, people-counting flow control solutions to facilitate social distancing, and various COVID-19 focused occupational health and safety services.
Alex Dacre, Chief Executive of Marlowe plc, said:
“We are pleased to have delivered another year of strong progress which saw accelerating organic growth, significant M&A and both margin enhancement and strong underlying cash generation. Whilst we have seen a level of disruption from COVID-19, we expect the impact to be manageable and believe that our resilient business model positions us more favourably than most other sectors of the economy to benefit from a wider recovery in activity once restrictions are eased. We expect the health, safety and compliance service sectors that we occupy to remain in sharp focus going forward and are confident there will be significant growth opportunities for the Group in the current year.
I would like to take this opportunity to express my thanks to the teams across Marlowe who have worked with such dedication throughout the past two months, ensuring that we have continued to deliver our services effectively in order to keep our clients safe, operational and compliant at all times.”
For further information:
Alex Dacre, Chief Executive
Tel: +44 (0) 203 813 8498
Mark Adams, Group Finance Director
Cenkos Securities plc (Nominated Adviser and Joint Broker)
Tel: +44 (0)20 7397 8900
Berenberg (Joint Broker)
Tel: +44 (0)20 3207 7800
Tel: +44 (0)20 3727 1340
Alex Le May
About Marlowe plc
Marlowe is a UK leader in specialist services which assure safety and regulatory compliance, whilst managing risk for businesses across the country. The company was formed to create sustainable shareholder value through the acquisition and development of businesses that provide regulated inspection, testing and compliance services. It is focused on health & safety, employment law compliance, fire safety, security, water treatment & hygiene, air quality and occupational health services – all of which are vital to the wellbeing of its customers operations and are invariably governed by regulation. Marlowe currently provides services to over 15% of Britain’s commercial premises and is increasingly attractive to customers who require a single outsourced, nationwide, provider of a comprehensive range of regulated compliance and safety services. Our customers can be found in most office complexes, high streets & leisure facilities, manufacturing plants and industrial estates, and include SMEs, local authorities, facilities management providers, multi-site NHS trusts and FTSE 100 companies.