The information contained within this announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as amended by
regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations
2019/310. Upon the publication of this announcement
via Regulatory Information Service, this inside information is
now considered to be in the public domain.
23 July 2024
Marlowe
plc
Preliminary unaudited
results for the year ended 31 March 2024
Marlowe's strategy moving
forward is focussed on the highly attractive and regulated
business-critical service markets across Testing, Inspection &
Certification and Occupational Health
Performance in line with
market expectations
Marlowe plc ("Marlowe", the "Group" or the "Company"), the leader in business-critical
services which assure safety and regulatory
compliance, announces its preliminary unaudited results for year ended 31
March 2024 ("FY24").
Financial performance of the Group
ADJUSTED RESULTS - GROUP
|
FY24
|
FY23
|
Change
|
|
|
|
|
Revenue
|
£503.2m
|
£465.7m
|
8%
|
Operating
profit2
|
£65.4m
|
£64.3m
|
2%
|
Profit before
tax2
|
£46.8m
|
£53.6m
|
(13)%
|
Earnings per share -
basic2
|
36.4p
|
45.3p
|
(20)%
|
|
|
|
|
Net debt (excluding lease
liabilities)
|
£176.6m*
|
£160.8m
|
|
|
|
|
|
|
|
|
|
STATUTORY RESULTS - GROUP
|
FY24
|
FY23
|
|
|
|
|
|
Revenue
|
£503.2m
|
£465.7m
|
|
Operating
profit3
|
£9.6m
|
£6.4m
|
|
(Loss) before
tax3
|
£(10.9)m
|
£(6.9)m
|
|
(Loss) per share
- basic3
|
(10.6)p
|
(3.9)p
|
|
|
|
|
|
Net debt
|
£203.2m*
|
£188.9m
|
|
*Net debt position prior to the completion of
the Group's £430 million Divestment and the return of £150 million
via a special dividend
On the 3 June 2024, the Group
announced the completion of the sale of certain Governance, Risk
& Compliance ("GRC") software and services assets for an
Enterprise Value of £430 million in cash. Marlowe's continuing
operations since 3 June 2024 comprise the Testing, Inspection &
Certification ("TIC") and Occupational Health ("OH") divisions on
which the Group's forward strategy is focussed.
Financial performance of continuing
operations
ADJUSTED RESULTS - CONTINUING OPERATIONS
|
FY24
|
FY23
|
Change
|
|
|
|
|
Revenue
|
£402.9m
|
£381.9m
|
5%
|
Adjusted
EBITDA1,2
|
£49.0m
|
£51.3m
|
(4)%
|
Adjusted EBITDA margin1,2
|
12.2%
|
13.4%
|
(120)bps
|
Adjusted operating
profit2
|
£32.1m
|
£36.0m
|
(11)%
|
STATUTORY RESULTS - CONTINUING OPERATIONS
|
FY24
|
FY23
|
|
|
|
Revenue
|
£402.9m
|
£381.9m
|
Operating
(loss)/profit3
|
£(5.0)m
|
£3.3m
|
(Loss) before
tax3
|
£(16.9)m
|
£(4.5)m
|
(Loss) per share
- basic3
|
(14.2)p
|
(4.9)p
|
1 Earnings before interest,
taxes, depreciation and amortisation ("EBITDA")
2 Explanation of non-IFRS
measures are contained within the Financial Review and note
2
3 Further details shown in
consolidated statement of comprehensive income
STRATEGY AND TRADING PERFORMANCE
A
leading business-critical service provider
· Marlowe's forward looking strategy is to focus on regulated
business-critical service markets across TIC and Occupational
Health with highly-recurring revenues based on non-discretionary
customer spend and underpinned by regulatory and insurance
requirements
· The
primary focus in the near term remains on driving margin
enhancement and organic growth
· In
addition, the business-critical service markets the Group occupies
are extremely fragmented and bolt-on acquisitions remain an
attractive route to delivering additional shareholder value in due
course
Completed strategic review creating significant shareholder
value
· Following the strategic review announced in November 2023,
the Company completed the sale of certain GRC software and services
assets (the "Divestment")
for an enterprise value of £430 million
· The
Group is returning up to an aggregate of £225 million of proceeds,
with £150 million already returned via a special dividend, equating
to £1.55 per share, paid on 5 July 2024, and by way of a share
buy-back programme commenced on that same day to return up to £75
million
· Marlowe's Board will continue to execute the delivery of the
Group's strategy while regularly evaluating ways to further
maximise shareholder value
Financial review of Group
· Revenue up 8% to £503.2
million
o Increased as a result of both organic growth and
contributions from bolt-on acquisitions during the
period
· Statutory operating profit
of £9.6 million and loss before tax of £10.9
million
o Total finance costs of £20.5 million (FY23: £13.3 million)
primarily driven by the increased costs of borrowing driven by
higher interest rates and higher levels of utilisation of the
Group's debt facilities
o Loss primarily relates to acquisition and disposal costs
(including strategic review costs) and restructuring adjusting
items amounting to £26.0 million (FY23: £23.8 million) which are
expected to reduce materially in the current financial
year
· Statutory loss per share of
10.6 pence (FY23: 3.9
pence)
· Strong balance sheet
following Divestment
o Net debt (excluding leases) reducing in the second half of
the year to £176.6 million at 31 March 2024 from £192.7 million as
at 30 September 2023 (31 March 2023: £160.8 million)
o Following the Divestment and payment of a £150 million
special dividend and the commencement of the share buy-back
programme, the Group now has a material net cash balance
o Group generated £83.8 million (FY23: £74.3 million) adjusted
net cash from operations before acquisitions & restructuring
investment (including strategic review costs) during
FY24
o Cash generated from operations of £57.8 million (FY23: £50.5
million)
Business review of continuing operations
· Continuing operations
revenue up 5% to £402.9m
o Organic growth of 1%1
· TIC revenue up 10% to £292.3
million
o Organic growth of 4%2 against strong prior year
comparator
o Deepening our presence across Fire Safety & Security
through four bolt-on acquisitions in H1
· Occupational Health revenue
down 4% to £110.6 million
o Revenue reflects short-term volume of contract
losses
o Good performance across the rest of the division
o The business has since secured £13.8 million of new business
since the start of FY24
· Adjusted EBITDA from
continuing operations down 4% to £49.0 million
o Adjusted EBITDA margins decreased 120bps to 12.2% (FY23:
13.4%)
o Occupational Health EBITDA reflects short-term volume impact
of contract losses
o TIC margins diluted by a short -term increased use of
subcontractors, temporary changes in revenue mix and a one-off
accounting adjustment following a review of the recoverability of
certain current assets in our Water and Air Hygiene
business
o Adjusted EBITDA margins expected to continue to improve in
both divisions and have a medium-term Group target of 15% as we
focus on operational efficiencies and revenue mix
· Statutory operating loss from continuing
operations £5.0 million
o Loss primarily as a result of the short-term revenue
reduction and margin dilution impact in Occupational Health, an
increase in acquisition and disposal costs (including strategic
review costs) and restructuring adjusting items amounting to £19.7
million (FY23: £16.6 million)
· Successful execution of
integration programme and M&A
o £16 million of capital invested3 during FY24
across four bolt-on acquisitions in Fire Safety &
Security
o Strong progress on integration programmes, with
all costs associated with restructuring
investments expected to conclude by 30 September 2024, in line with
market expectation
1Based on
an adjusted prior year comparable of £397.4m which includes
performance of acquisition made in year
2 Based on
an adjusted prior year comparable of £282.4m which includes
performance of acquisition made in year
3 Based
on enterprise value of £16.3 million and excludes the recently
disposed of acquisition of IMSM made within the year
Current trading and outlook
· The
new financial year has started well, and we expect to deliver
mid-single digit organic revenue growth driven by our TIC
division
· Marlowe forward strategy focussed on highly attractive and
regulated business-critical service markets across Testing,
Inspection & Certification and Occupational Health
· Occupational Health revenue expected to be flat in FY25, with
prior year contracts losses offset by recent contract
wins
· All
associated restructuring investments are expected to conclude by 30
September 2024, incurring costs estimated at £5 million in the
first half of the current year
· We
have made good progress with the ongoing share buyback programme,
having acquired 7,364,035 million shares for a total consideration
of £30.9 million as at 19 July 2024
· We
expect remaining net cash proceeds of the Divestment and the
Group's strong cash generation will be used either to return
further capital to shareholders or, when appropriate, invest in
bolt-on acquisitions
· The
Group is focussed on driving organic growth while improving margins
and delivering attractive free cash flow and it expects to deliver
strong adjusted EBITDA growth
Lord Ashcroft, Interim Non-Executive Chair,
commented:
"The Group is now focussed on the highly attractive and
regulated business-critical service markets following the
significant divestment of a number of GRC software and service
assets post year end. The enterprise value of £430 million achieved
on exit was a good outcome for Marlowe and its shareholders and
significantly exceeded Marlowe's market capitalisation prior to
announcement."
"Marlowe now consists of two market-leading divisions in TIC
and Occupational Health. Within TIC we implement testing and
inspection regimes to certify business premises and ensure critical
systems are safe and compliant across fire safety & security
and water & air hygiene. Our Occupational Health business
assures regulatory compliance across our customers' employees,
implementing health surveillance, absence management and employee
wellbeing initiatives."
"Looking forward the Group has a clear focus on driving
organic growth, delivering margin improvement and converting this
into strong cash flow performance. This focus and our strong
balance sheet supports the Board's confidence in the business going
forward."
"I would like to thank all of Marlowe's employees for all
their commitment and hard work throughout the year and we would
like to wish all the best to those who left us with the
divestment."
Marlowe has today published a full
year results presentation which has been made available on the
Marlowe plc website.
For further information:
|
|
|
|
Marlowe plc
|
|
Lord Ashcroft, Interim
Non-Executive Chair
Adam Councell, Chief Financial
Officer
Benjamin Tucker, Head of Investor
Relations & Strategy
|
www.marloweplc.com
0203 813 8498
IR@marloweplc.com
|
Cavendish Capital Markets Limited (Nominated Adviser &
Joint Broker)
|
Ben Jeynes
George Lawson
|
0207 220 0500
|
Investec Bank (Joint Broker)
|
|
Henry Reast
Oliver Cardigan
|
0207 597 5970
|
FTI Consulting
|
0203 727 1340
|
Nick Hasell
Alex Le May
|
|
BUSINESS REVIEW
This has been a pivotal year for
Marlowe. In November 2023, we announced a review of the Group's
structure. It had become clear that as the Group had grown and
evolved, its operational activities had diversified into sectors
with varying operational and financial characteristics.
Following the announcement of the
strategic review we received an offer for a number of our GRC
software and service assets. Consequently, in February 2024, we
announced a binding agreement for the divestment of these assets
for an enterprise value of £430 million, a valuation that
represented 121% of Marlowe's market capitalisation on the day
prior to announcement.
The sale proceeds from the
Divestment are expected to be c.£405 million after relevant
adjustments, including estimated transaction costs, settlement of
certain transaction-related liabilities and earn-outs,
reorganisation and separation costs.
On 3 June 2024 we announced the
completion of the Divestment and the return of up to £225 million
of proceeds to shareholders. We have subsequently repaid the
Group's entire debt facilities and returned £150 million to
shareholders via a special dividend paid on 5 July 2024. As of 5
July 2024, the Board initiated a share buy-back programme of up to
£75 million, and this is ongoing.
Marlowe now comprises of two
market-leading compliance service divisions in Testing, Inspection
and Certification ("TIC") and Occupational Health ("OH"). These
markets have strong structural tailwinds, with many of the services
we provide being non-discretionary to our customers and leading to
an estimated 80% of recurring revenues across the Group.
We continue to see significant
opportunity for further growth as we look ahead. We are focussed on
driving organic revenues, improving margins and delivering
attractive free cash flow. We have a refocused strategy and are
well positioned to capitalise on the attractive compliance service
markets we serve.
Financial results - continuing operations
The results for the Group reflect
a year of significant integration and transformation. Against that
backdrop, the Group performed well and made strong operational
progress within its divisions. Revenue from continuing operations
grew 5% to £402.9 million benefiting from 4% organic growth in TIC
and the contribution from acquisitions during the period.
Occupational Health revenue decreased due to the impact of contract
losses. The division has since won £13.8 million of new business
which has started or will start during FY25.
Adjusted EBITDA of £49.0 million
(FY23: £51.3 million) reflects the retained Group operations. The
reduction on the prior year has been driven by contract losses
within Occupational Health, increased use of subcontractors and a
one-off accounting adjustment relating to a review of the
recoverability of certain current assets within our Water & Air
Hygiene business. This resulted in a 120bps compression of adjusted
EBITDA margins year-on-year. Adjusted EBITDA margins in TIC
improved towards the year end as we transitioned work from
subcontractors to in-house fee-earners. We expect adjusted EBITDA
margins to continue to improve in both divisions and have a
medium-term Group target of 15% as we focus on delivering
operational efficiencies and improving revenue mix.
Statutory operating loss was £5.0
million (FY23 operating profit: £3.3 million), with the reduction
resulting from temporary revenue reduction and margin dilution in
Occupational Health as described in the Business Review, the costs
relating to the strategic review in the year and an increase in
fair value loss on contingent consideration and acquisition-related
incentive schemes.
Our business is highly cash
generative and free cash flow is a key metric the Board and
management are focussed on. The Group, including the divested
assets, generated £83.8 million of adjusted cash from operations
before acquisition and restructuring costs with a particular strong
performance in the second half. Adjusted net debt (excluding
leases) increased from £160.8 million as at 31 March 2023 to £176.6
million as at 31 March 2024 following £30.4 million being deployed
on M&A (including purchase and repayment of subsidiary
undertakings) in the first half of the year which was offset by the
strong cash generation noted above. Following the completion of the
Divestment and the return of £150 million via a special dividend
paid on 5 July 2024, the Group has a material net cash
balance.
Attractive and resilient business model
The compliance markets we serve
are underpinned by regulation and are therefore predominantly
non-discretionary to our customers and essential throughout the
economic cycle. An estimated 80% of our revenues are recurring with
customers typically contracted on 3-to-5-year agreements, providing
us with secure and highly visible revenue streams.
Each of our markets have
structural growth characteristics and benefit from onerous and
evolving regulations with increasing enforcement action from
regulators. Compliance spending continues to grow at attractive
rates from the increasing focus on ESG and the health & safety
and wellbeing of staff.
The Group has low customer
concentration and operates across a broad range of sectors. We
serve 30,000 customers from SMEs to large multinationals and public
sector organisations, with no customer representing more than 4% of
Group revenues.
Strong balance sheet and disciplined approach to capital
allocation
We completed five acquisitions in
the first half of the year for a total enterprise value of £37
million. Our largest acquisition was IMSM which was subsequently
disposed of as part of the Divestment. We completed four bolt
on-acquisitions within our Fire Safety & Security business for
an enterprise value of £16.3 million, deepening our presence in
this attractive vertical.
The Group retained a material net
cash position following completion of the Divestment, the
retirement of the debt facility and the return of £150 million to
shareholders via a special dividend. The Group will return up to
£75 million of further capital via a share buyback programme and
this commenced on 5 July 2024. On 24 June 2024, the Group entered
into a new unsecured 3-year Revolving Credit Facility ("RCF") of
£50 million with an uncommitted accordion facility of £50 million,
and these facilities are currently undrawn.
The Board anticipates that the
remaining net cash proceeds of the Divestment and the Group's
strong cash generation will be used either to return further
capital to shareholders or, when appropriate, invest in bolt-on
acquisition opportunities across TIC and Occupational Health in due
course.
Strengthening and integrating
We have made significant
operational progress in the year with all integration programmes.
We have now built the clear market leader in Occupational Health
and Water & Air Hygiene and are a top 3 player in Fire Safety
& Security. During the year, we continued to deliver extensive
synergy benefits across each of our businesses. We invested £14.6
million into restructuring (FY23: £15.2 million) and successfully
removed 200 duplicated roles, exited several properties and
discontinued several legacy IT systems.
We are on target to complete all
current programmes by 30 September 2024 with total expected costs
of £5 million in the current financial year.
Marlowe's primary focus in the
near term remains on driving margin enhancement and organic growth
across these integrated platforms within the highly attractive and
defensive compliance service markets.
Board Changes
On the completion of the
Divestment, Alex Dacre transferred with the Divestment and resigned
as Chief Executive of Marlowe. Additionally, on 3 June 2024,
the Group announced the resignation of
Kevin Quinn as Executive Chairman with Lord Ashcroft KCMG PC
assuming the role of Non-Executive Chairman on an interim basis
having joined the Board on 18 March 2024.
The Board would like to
thank Kevin who has made a significant
contribution to the development of Marlowe and extends its sincere
thanks for his dedicated service and commitment. Additionally, the
Board would like to thank Charles Skinner, who stepped down from
the Marlowe Board in March 2024, for his support and advice over
his 8-year tenure.
Finally, we would like to welcome
Julia Robertson as Independent Non-Executive Director. Julia is
Group Chief Executive Officer of Headfirst Global plc and brings a
wealth of experience.
Outlook
The year has started well, and we
continue to see strong demand for our business-critical services.
We expect to deliver mid-single digit organic revenue growth across
our TIC division and maintain Occupational Health revenues as
strong new business wins are onboarded and replace the impact of
the lost contracts. The Group is focused on driving margin
enhancement and expects to deliver high single digit adjusted
EBITDA growth.
The Group expects to finalise the
remaining integration programmes across TIC and OH by 30 September
2024 with no further integration costs expected in H2 FY25.
The Board retains the flexibility to use the
remaining net cash proceeds from the Divestment alongside the
Group's strong cash generation to return further return capital or
to pursue carefully selected bolt-on acquisitions where
appropriate.
In the medium term we expect both
businesses to deliver mid-single digit organic growth as we
leverage our scale and upsell, in addition to cross-sell within our
TIC division.
Testing, Inspection & Certification
The services we provide within our
Testing, Inspection and Certification ("TIC") division largely
revolve around keeping our customers' business premises safe and
compliant with relevant regulation and legislation. Our services
address compliance requirements across Fire Safety & Security,
and Water & Air Hygiene.
|
FY24
|
FY23
|
Change
|
|
Revenue
|
£292.3m
|
£266.3m
|
10%
|
Adjusted EBITDA1,2
|
£35.2m
|
£34.3m
|
3%
|
Adjusted operating
profit2
|
£23.2m
|
£23.4m
|
(1)%
|
Adjusted EBITDA margin1,2
|
12.0%
|
12.9%
|
(90)bps
|
1 Earnings before interest,
taxes, depreciation and amortisation ("EBITDA")
2 Explanation of non-IFRS
measures are contained within the Financial Review and note
2
Performance Review
Revenues increased 10% to £292.3
million (FY23: £266.3 million). We delivered organic growth in-line
with the market of 4% in FY24 against a very strong prior-year
period in FY23 when revenues grew 11% organically. Our performance
also benefited from four acquisitions made in year. Adjusted EBITDA
was up 3% as a result of organic growth and the contribution of
acquisitions. Following a review of the recoverability of certain
current assets in our Water and Air business the Group took the
decision to make a one-off adjustment to bring them in line with
their expected value. The total one-off adjustment resulted in a
£1.5 million reduction in adjusted EBITDA.
Fire Safety &
Security, which represent nearly half of
the divisional revenues, delivered mid-single digit organic growth.
This was driven by good organic growth in our mechanical business
(which includes the installation, maintenance and inspection of
smoke ventilation, sprinkler and gas suppression systems) slightly
offset by slower growth within our higher margin passive
fire4 solutions. Additionally, a now-concluded
integration programme resulted in some attrition of field-based fee
earners from a recently acquired business. Consequently, this
impacted revenue and margins and required an increased reliance on
subcontractors to manage the work being transferred. We have taken
steps to address the issue and subcontractor usage has now returned
to prior levels. This margin dilution was slightly offset by
continuing route density benefits and IT related improvements in
scheduling, which resulted in an increase in revenue per day per
fee earner to over £660 (FY23: £610).
4Passive fire protection is a barrier or shield, stopping the
spread of fire from one area to another
Water & Air Hygiene,
which makes up just over half of the divisional
revenues, delivered low single-digit organic growth. Our main water
business performed well in the year with good levels of new
business. However, this was offset by our chemical business, which
accounts for around 10% of revenues and was impacted by a reduction
in commodity prices especially after a strong performance in FY23.
Overall adjusted EBITDA was flat in the year due to some pricing
challenges within a portion of our legacy longer-term fixed
contacts (which we are transitioning away from), the weaker
performance of our chemical business and the one-off current asset
adjustment.
Operational Review
Fire Safety & Security made four bolt-on acquisitions during the year for a total
enterprise value of £16.3 million. Integration programmes are now
concluding, with acquired businesses performing well despite
the attrition of field-based fee earners
earlier in the year.
We have continued to benefit from
strong customer retention with our customers retained on average
for more than 10 years. We believe this is attributable to
continuous improvements in our customer service levels, innovative
new solutions and our dedication to ensuring our customers' ongoing
compliance with legislation. Compliance rates5 received
unwavering focus during the year, with compliance levels improving
to 98% (FY23: 97%) as we continued to benefit from improved
scheduling, and our ability to multi skill our engineers through
Marlowe Academy, our inhouse training facility.
Over the year we have continued to
develop innovative solutions for our customers, underpinned by our
24/7 alarm monitoring centres based in Manchester. Connected
services provide the division with the ability to design and
deliver bespoke loss prevention programmes which are supported by a
robust return on investment.
During the year we placed strong
emphasis on improving our data analytics which has resulted in
greater visibility over our customers' portfolio and profitability.
We expect the improved transparency on the financial performance of
our operations to result in more effective contract pricing and
negotiations across the business.
Additionally, we have increasingly
focussed on employee retention. Given the nature of Marlowe's
business, retaining and hiring talent is crucial in fulfilling any
new work and an effective HR programme is critical to reducing
constraints on our growth and use of subcontractors, which in turn
dilutes margins. An example of this focus can be seen in our
ability to train and qualify maintenance engineers through Marlowe
Academy. We trained 30 maintenance engineers during the year, which
not only reduces our reliance on external candidates, but also
facilitates longer retention rates through the development of
homegrown talent.
5Inspection and remedial work completed within deadline or
deadline +45 days.
Water & Air Hygiene delivered a number of integration programmes during the year
and removed 124 duplicated roles, exited 5 premises and removed 10
legacy systems from previous acquisitions. We are now coming to the
end of this process and expect integration expense to be concluded
by 30 September 2024.
The Group appointed a new CEO of
the Water & Air Hygiene division in December 2023 who brings a
wealth of operational experience having spent the three previous
years as the division's Chief Operating Officer. Since this
appointment we have been focusing on a new five-point plan, which
aims to simplify the business, drive margins and improve cash
generation. The business is already seeing strong margin
improvements from the initiatives put in place.
As with Fire Safety &
Security, our integration process has led to better management
information and therefore clearer visibility of the business, which
in turn allows us to take more informed decisions and cost controls
measures. Now that restructuring programme are concluding, the
near-term strategy is to continue to implement operational
improvements and drive margins.
Additionally, we are starting to
see the full benefits of our proprietary end-to-end ERP system,
Wave, which was implemented last year. Wave is now delivering over
half a million tasks per year which has further supported our
market-leading compliance rates and when coupled with our national
scale, allows us to deliver the same level of service across all
our clients on a National scale.
Occupational Health
We are the UK leader in the
occupational health and wellbeing sector. We assure regulatory
compliance for our clients, improving the health & wellbeing of
their employees, minimising workplace risk and maximising corporate
productivity.
|
|
|
FY24
£m
|
FY23
£m
|
Change
|
|
Revenue
|
£110.6m
|
£115.6m
|
(4)%
|
Adjusted EBITDA1,2
|
£18.1m
|
£22.0m
|
(18)%
|
Adjusted operating
profit2
|
£13.6m
|
£18.0m
|
(24)%
|
Adjusted EBITDA margin1,2
|
16.4%
|
19.0%
|
(260)bps
|
|
|
|
| |
1 Earnings before interest,
taxes, depreciation and amortisation ("EBITDA")
2 Explanation of non-IFRS
measures are contained within the Financial Review and note
2
Performance Review
Revenue was down 4% following the
impact of the loss of customer contracts including the previously
announced impact of the insourced customer loss. The business
however achieved 93% customer retention6 during FY24,
delivered strong new business wins in the year, securing £9.9
million of revenue which has commenced or is scheduled to start in
the coming months and. The business has subsequently won an
additional £3.9 million since year end which has more than
compensated for the business lost during the prior year.
EBITDA decreased by 18% due to the
contract losses noted above. On the transfer of contracts, TUPE did
not apply, allowing us to retain our clinical specialists for
redeployment on new contracts and across our operations. This
resulted in a short-term margin impact but has allowed us to
successfully bid and fulfil all new contract wins. This margin
impact has been slightly offset through the benefits of our
integration programmes as we are able to deliver more efficient
scheduling and service delivery through our leading technology
platforms.
6Based on number of
customers in year
Operational review
Occupational Health
is coming to the end of a large integration
programme having combined nine occupational health acquisitions
since entering the market in early 2020. Occupational Health now
operates under one management team and one brand, Optima Health. We
are the market leader, with 900 clinical specialists, servicing 5
million employees and delivering over 1 million interventions each
year. Customers, clinicians, and delivery teams are now on common
IT platforms, which allows us to benefit from efficient delivery of
service, consistent clinical governance, and best practice across
our operation.
Throughout the integration
programme, we have removed 140 duplicated roles, rationalised our
property portfolio by exiting six premises, and removing several
duplicated and legacy IT systems. Furthermore, we have deployed our
leading clinical CPD programme to improve our people's training and
development opportunities with over 100 people being inducted onto
our class leading GROW programme. This in turn leads to better
outcomes for our customers, through industry-leading turnaround
times for services. Additionally, through investment in leadership
& development more than 50 of our people have achieved a
professional qualification and we have seen a 20% improvement in
our employee Net Promoter Score.
Since the year end, we have
retired the final legacy systems after transferring the remaining
tranche of customers onto the Optima Health platform and are set to
exit an additional premises in the half. We expect all
restructuring expense to have concluded by 30 September
2024.
We achieved 93% customer retention
in year as we continue to deliver best-in-class clinical governance
rates and continue to showcase our value to our customers, through
tangible improvements in the productivity of their
workforce.
FINANCIAL REVIEW
Financial review of Group
Revenue, from continuing and
discontinued operations, grew in the year to £503.2 million (FY23:
£465.7 million). The increase reflects organic growth and
contribution from acquisitions completed in the year, offset by
reduction in revenue in Occupational Health as a result of the
impact of contract losses. Organic revenue growth % on a
like-for-like basis is defined as the year-on-year growth of our
entire business. This includes the growth or decline of
acquisitions from the day of completion, by including their
performance from the corresponding prior period. The benefit of
this approach is that it provides insight as to how recently
acquired businesses, along with our existing business, are
performing.
Adjusted profit before tax
decreased by 13% to £46.8 million (FY23: £53.6 million) driven by a
weakening in Occupational Health following the contract losses and
higher finance costs on the Group's debt facilities resulting from
the increased costs of
borrowing.
Statutory loss before tax was
£10.9 million (FY23 loss before tax: £6.9 million) with the
increased loss resulting from the reduction in adjusted EBITDA
margin noted in the business review combining with higher finance
costs and an increase in acquisition and disposal costs to £7.8
million (FY23: £2.7m) which include the strategic review costs
conducted in the year.
Looking forward, following the
completion of the Divestment in May 2024, the Group is in a strong
position to deliver meaningful improvement in both the statutory
and adjusted key financial metrics in FY25.
Non-IFRS measures
IFRS measures ensure that the
financial statements contain all the information and disclosures
required by all accounting standards and regulatory obligations
that apply to the Group. The Annual Report and financial statements
also include measures which are not defined by generally accepted
accounting principles such as IFRS. We believe this information,
along with comparable IFRS measures, is useful as it provides
investors with a basis for measuring the performance of the Group
on an underlying basis. The Board and our managers use these
financial measures to evaluate our operating performance. Non-IFRS
financial measures should not be considered in isolation from, or
as a substitute for, financial information presented in compliance
with IFRS. Similarly, non-IFRS measures as reported by us may not
be comparable with similar measures reported by other
companies.
Due to the nature of acquisitions,
costs associated with those acquisitions, subsequent integration
costs and the non-cash element of certain charges, the Directors
believe that adjusted measures provide shareholders with a useful
representation of the underlying earnings derived from the Group's
business and a more comparable view of the year-on-year underlying
financial performance of the Group.
A reconciliation between statutory
loss before tax and the adjusted profit before tax performance
measure is shown below:
|
|
|
FY24
|
FY23
|
|
£'m
|
£'m
|
Statutory (loss) before tax
|
(10.9)
|
(6.9)
|
Acquisition and disposal costs
(including strategic review costs)
|
7.8
|
2.7
|
Restructuring costs
|
18.2
|
21.1
|
Amortisation of acquired
intangibles
|
25.6
|
24.0
|
Share-based payments (excluding
SAYE schemes)
|
(0.8)
|
1.7
|
Fair value losses in contingent
consideration and acquisition related incentive schemes
|
5.0
|
8.4
|
Exceptional finance
costs
|
1.9
|
2.6
|
Adjusted profit before tax
|
46.8
|
53.6
|
|
|
| |
Adjusting items
Acquisition and disposal costs
(including strategic review costs) totalled £7.8 million in the
year (FY23: £2.7 million). During the first half of the year the
Group undertook a strategic review to assess the merits of a
potential separation of certain businesses across its TIC and GRC
Divisions. Strategic Review costs include professional fees, legal
fees and staff costs. These costs are non-recurring and not
considered to be reflective of the underlying trading
performance.
Restructuring investment, being
the costs associated with the integration of acquisitions, remain a
key component of delivering shareholder value by increasing future
returns made on acquired businesses. Restructuring costs for the
year were £18.2 million (FY23: £21.1 million) reflecting
acquisitions made in year and the two key integration programmes
within Occupational Health and Water & Air Hygiene.
Restructuring programmes relating to continuing operations are now
being finalised and we expect all restructuring expense to have
ceased by 30 September 2024. Restructuring costs primarily consist
of:
· The
cost of duplicated staff roles during the integration and
restructuring period;
· The
implementation and redundancy cost of delivering the post
completion staff structures; and
· IT
costs associated with the integration and transfer to Group IT
systems, including costs of third party software used in the
delivery of customer contracts where there is a programme to
transition such software to one of the Group's existing
platforms.
Amortisation of acquired
intangible assets for the year was £25.6 million (FY23: £24.0
million) with the increase attributable to the higher carrying
value of intangible assets resulting from acquisition made in
year.
Non-cash share-based payment
credit for the year was £0.8 million (FY23: £1.7 million charge)
and largely relates to the charge for the Executive Incentive Plan.
The credit in the year relates to an adjustment to reflect leavers
from the scheme.
Certain long term incentive
schemes for platform businesses have been established to
incentivise key members of our platform acquisition's senior
management to create shareholder value through the successful
acquisition, restructuring and integration of businesses in their
chosen service sectors. These schemes have similar characteristics
to earn out structures in place within the Group and have a similar
purpose. As such, these schemes are considered to be part of the
investing activities of the group and are not-recurring in nature.
The total charge for these schemes and for movements in contingent
consideration provisions during the year totalled £5.0 million
(FY23: £8.4 million).
Exceptional finance costs for the
year were £1.9 million (FY22: £2.6 million) and relate to the
non-cash unwinding of the discount applied to contingent
consideration to reflect the time value of money.
Further details on the items
considered when arriving at adjusted performance measures can be
found in Note 3.
Earnings per share
Basic adjusted earnings per share
are calculated as adjusted profit for the Group, including the
divested assets, for the year less a standard tax charge divided by
the weighted average number of shares in issue in the year. Basic
earnings per share reflect the actual tax charge.
Earnings per share* (EPS)
|
FY24
|
FY23
|
Basic adjusted earnings per
share
|
36.4p
|
45.3p
|
Basic (loss) per share
|
(10.6)p
|
(3.9)p
|
*Refer to note 5
Interest
Finance costs, excluding
exceptional finance costs, amounted to £18.6 million in the year
(FY23: £10.7 million). This movement reflects the increased costs
of borrowing driven by interest rates and higher levels of
utilisation of the Group's debt facilities.
As of 5 July 2024, the Group
retained a material net cash position following completion of the
Divestment, the retirement of the debt facility and the return of
£150 million to shareholders via a special dividend. The Group will
return up to £75 million of further capital via a share buyback
programme with programme having commenced on 5 July
2024.
On 24 June 2024, the Group entered
into a new unsecured 3-year Revolving Credit Facility ("RCF") of
£50 million, which is currently undrawn and an uncommitted
accordion facility of £50 million.
Taxation
UK Corporation Tax is calculated
at 25% (FY23: 19%) of the estimated assessable profit for the year.
In addition, deferred taxes at the statement of financial position
date were remeasured to reflect the 25% tax rate from 1 April
2023.
Statement of financial position
The Group maintains a strong
balance sheet with net assets as at 31 March 2024 of £437.5 million
(31 March 2023: £443.3 million). At the same date total assets were
£890.3 million (2023: £851.4 million), and total liabilities were
£458.7 million (2023: £408.1 million). Total assets primarily
consist of assets held for sale of £398.2 million related to the
Divestment and intangible assets of £343.2 million and trade and
other receivable of £98.0 million. Total liabilities include bank
loans of £206.0 million, which were repaid following the
transaction, and trade and other payables of £83.5 million and
liabilities directly associated with assets classified as held for
sale of £82.3 million.
As at 31 March 2024, contingent
consideration of £16.3m in respect of the disposal group, had been
classified as discontinued operations and shown within liabilities
held for sale. The continuing operations have contingent
consideration of £3.5 million as at 31 March 2024.
Cash flow, net debt and financing
The Group benefits from revenues
which have beneficial underlying working capital characteristics.
As a result, working capital as a percentage of FY24 revenue at the
full year was less than 1%.
Across the whole year the Group
generated adjusted net cash from operations of £83.8 million (FY23:
£74.3 million) before £26.0 million of acquisition &
restructuring investment (including strategic review
costs).
|
|
|
|
FY24
£m
|
FY23
£m
|
Adjusted cash generated from operations before acquisition
and restructuring costs (inc. strategic review)
|
83.8
|
74.3
|
Acquisition & restructuring
costs (inc. strategic review)
|
(26.0)
|
(23.8)
|
Cash generated from operations
|
57.8
|
50.5
|
Lease repayments
|
(11.9)
|
(11.1)
|
Net finance costs
|
(17.8)
|
(8.6)
|
Tax
|
(2.0)
|
(8.3)
|
M&A (inc. purchase and
repayment of subsidiary undertakings)
|
(30.4)
|
(59.5)
|
Net capex
|
(13.0)
|
(15.0)
|
Proceeds from share
issuance
|
1.5
|
-
|
-Movement in net debt
|
(15.8)
|
(52.0)
|
Opening net debt (excluding
leases)
|
(160.8)
|
(108.8)
|
Closing net debt (excluding
leases)
|
(176.6)
|
(160.8)
|
The increase in net debt reflects
the execution of the M&A strategy with £30 million deployed on
M&A and the significant investment in restructuring programmes.
This was partially offset by strong cash generation, particularly
in the second half of the year.
During the year, the Group had
£11.9 million (FY23: £11.1 million) of lease expenses of which just
below £11 million relates to continuing operations. Capital
expenditure totalled £13.0 million (FY23: £15.0 million) of which
£5.5 million relates to the continuing operations.
Net debt as at 31 March 2024,
including inter alia £26.6 million of lease liabilities, was £203.2
million (FY23: £188.9 million). Adjusted net debt (excluding lease
liabilities) at year was £176.6 million (FY23: £160.8
million). Since the year end the Group
repaid its old debt facility and now has a material net cash
position following the completion of the Divestment and subsequent
£150 million payment of a special dividend on 5 July 2024.
The Group has subsequently initiated a share
buyback scheme where it will buy-back up to £75 million of
shares.
On 24 June 2024, the Group entered
into a new unsecured 3-year Revolving Credit Facility ("RCF") of
£50 million with an uncommitted accordion facility of £50 million,
these facilities are currently undrawn.
Key Performance Indicators ('KPIs')
The Group uses many different KPIs
at an operational level which are specific to the business and
provide information to management. The Board uses KPIs that focus
on the financial performance of the Group such as revenue, adjusted
EBITDA, adjusted EPS and net cash generated from
operations.
Unaudited consolidated statement of
comprehensive income
For the year ended 31 March
2024
|
|
|
|
|
|
|
2024
|
|
|
2023
|
|
Note
|
Continuing
operations
|
Discontinued
operations
|
Total
|
Continuing
Operations
|
Discontinued
operations
|
Total
|
|
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
|
|
|
|
|
|
|
|
Revenue
|
2
|
402.9
|
100.3
|
503.2
|
381.9
|
83.8
|
465.7
|
Cost of sales
|
|
(251.3)
|
(34.2)
|
(285.5)
|
(243.5)
|
(33.2)
|
(276.7)
|
Gross profit
|
|
151.6
|
66.1
|
217.7
|
138.4
|
50.6
|
189.0
|
Administrative expenses excluding
acquisition and other costs
|
|
(119.5)
|
(32.8)
|
(152.3)
|
(102.4)
|
(22.3)
|
(124.7)
|
Acquisition and disposal costs
(including strategic review)
|
3
|
(5.1)
|
(2.7)
|
(7.8)
|
(1.4)
|
(1.3)
|
(2.7)
|
Restructuring costs
|
3
|
(14.6)
|
(3.6)
|
(18.2)
|
(15.2)
|
(5.9)
|
(21.1)
|
Amortisation of acquired
intangibles
|
3
|
(13.2)
|
(12.4)
|
(25.6)
|
(12.2)
|
(11.8)
|
(24.0)
|
Share based payments (excluding
SAYE schemes) and legacy long-term incentives
|
3
|
0.8
|
-
|
0.8
|
(1.7)
|
-
|
(1.7)
|
Fair value losses in contingent
consideration and acquisition related incentive schemes
|
3
|
(5.0)
|
-
|
(5.0)
|
(2.2)
|
(6.2)
|
(8.4)
|
Total administrative expenses
|
|
(156.6)
|
(51.5)
|
(208.1)
|
(135.1)
|
(47.5)
|
(182.6)
|
Operating (loss)/profit
|
|
(5.0)
|
14.6
|
9.6
|
3.3
|
3.1
|
6.4
|
Finance costs
|
|
(11.8)
|
(6.8)
|
(18.6)
|
(6.9)
|
(3.8)
|
(10.7)
|
Exceptional finance
costs
|
|
(0.1)
|
(1.8)
|
(1.9)
|
(0.9)
|
(1.7)
|
(2.6)
|
Total finance costs
|
|
(11.9)
|
(8.6)
|
(20.5)
|
(7.8)
|
(5.5)
|
(13.3)
|
(Loss)/profit before tax
|
|
(16.9)
|
6.0
|
(10.9)
|
(4.5)
|
(2.4)
|
(6.9)
|
Income tax
credit/(charge)
|
4
|
3.2
|
(2.5)
|
0.7
|
2.8
|
0.3
|
3.1
|
(Loss)/profit for the year
|
|
(13.7)
|
3.5
|
(10.2)
|
(1.7)
|
(2.1)
|
(3.8)
|
Other comprehensive
income
|
|
-
|
-
|
-
|
|
|
-
|
Total comprehensive (loss)/profit for the
year
|
|
(13.7)
|
3.5
|
(10.2)
|
(1.7)
|
(2.1)
|
(3.8)
|
Attributable to owners of
the parent
|
|
(13.7)
|
3.5
|
(10.2)
|
(1.7)
|
(2.1)
|
(3.8)
|
Loss per share attributable to owners of the parent
(pence)
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
Basic
|
5
|
(14.2)p
|
|
(10.6)p
|
(4.9)p
|
|
(3.9)p
|
Diluted
|
5
|
(14.2)p
|
|
(10.6)p
|
(4.9)p
|
|
(3.9)p
|
Unaudited consolidated statement of
changes in equity
For the year ended 31 March
2024
|
Note
|
Share
capital
£m
|
Share
premium
£m
|
Merger
reserve
£m
|
Other
reserves
£m
|
Retained earnings/(deficit)
£m
|
Total
equity
£m
|
|
|
|
|
|
|
|
|
Balance at 1 April 2022
|
|
47.9
|
384.8
|
9.9
|
3.5
|
(0.1)
|
446.0
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
(3.8)
|
(3.8)
|
Total comprehensive loss for the year
|
|
-
|
-
|
-
|
-
|
(3.8)
|
(3.8)
|
|
|
|
|
|
|
|
|
Transaction with owners
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
-
|
2.3
|
-
|
2.3
|
Deferred tax on share-based
payments
|
|
-
|
-
|
-
|
(1.2)
|
-
|
(1.2)
|
|
|
-
|
-
|
-
|
1.1
|
-
|
1.1
|
|
|
|
|
|
|
|
|
Balance at 31 March 2023
|
|
47.9
|
384.8
|
9.9
|
4.6
|
(3.9)
|
443.3
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
(10.2)
|
(10.2)
|
Total comprehensive loss for the year
|
|
-
|
-
|
-
|
-
|
(10.2)
|
(10.2)
|
|
|
|
|
|
|
|
|
Transaction with owners
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
Issue of shares during the
year
|
11
|
0.5
|
1.4
|
2.6
|
-
|
-
|
4.5
|
Cancellation of share
premium
|
12
|
-
|
(384.9)
|
-
|
-
|
384.9
|
-
|
|
|
0.5
|
(383.5)
|
2.6
|
(0.1)
|
384.9
|
4.4
|
|
|
|
|
|
|
|
|
Balance at 31 March 2024
|
|
48.4
|
1.3
|
12.5
|
4.5
|
370.8
|
437.5
|
Unaudited consolidated statement of
financial position
As at 31 March 2024
|
Note
|
2024
|
2023
|
|
|
£'m
|
£'m
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
|
343.2
|
644.1
|
Property, plant and
equipment
|
|
10.1
|
11.7
|
Right-of-use assets
|
|
25.4
|
27.4
|
Trade and other
receivables
|
8
|
-
|
4.8
|
Deferred tax asset
|
|
4.4
|
4.4
|
|
|
383.1
|
692.4
|
Current assets
|
|
|
|
Inventories
|
|
9.7
|
9.3
|
Trade and other
receivables
|
8
|
98.0
|
116.4
|
Cash and cash
equivalents
|
|
-
|
30.2
|
Current tax asset
|
|
1.3
|
1.8
|
Assets classified as held for
sale
|
|
398.2
|
1.3
|
Total current assets
|
|
507.2
|
159.0
|
|
|
|
|
Total assets
|
|
890.3
|
851.4
|
|
|
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
9
|
(83.5)
|
(123.2)
|
Financial liabilities - bank
overdrafts
|
10
|
(25.8)
|
-
|
Financial liabilities -
borrowings
|
10
|
(206.0)
|
-
|
Financial liabilities - lease
liabilities
|
10
|
(9.4)
|
(9.7)
|
Provisions
|
|
(1.2)
|
(1.4)
|
Liabilities directly associated
with assets classified as held for sale
|
|
(82.3)
|
-
|
Total current liabilities
|
|
(408.2)
|
(134.3)
|
|
|
|
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
9
|
(0.7)
|
(12.0)
|
Financial liabilities -
borrowings
|
|
-
|
(191.0)
|
Financial liabilities - lease
liabilities
|
10
|
(16.9)
|
(18.4)
|
Deferred tax liabilities
|
|
(26.0)
|
(51.2)
|
Provisions
|
|
(1.0)
|
(1.2)
|
Total non-current liabilities
|
|
(44.6)
|
(273.8)
|
|
|
|
|
Total liabilities
|
|
(452.8)
|
(408.1)
|
|
|
|
|
Net assets
|
|
437.5
|
443.3
|
|
|
|
|
Unaudited consolidated statement of
financial position
As at 31 March 2024
|
Note
|
2024
|
2023
|
|
|
£'m
|
£'m
|
EQUITY
|
|
|
|
Share capital
|
11
|
48.4
|
47.9
|
Share premium
|
12
|
1.3
|
384.8
|
Merger reserve
|
|
12.5
|
9.9
|
Other reserves
|
|
4.5
|
4.6
|
Retained
earnings/(deficit)
|
|
370.8
|
(3.9)
|
Equity attributable to owners of
parent
|
|
437.5
|
443.3
|
Unaudited consolidated statement of
cash flows
For the year ended 31 March
2024
|
Note
|
2024
£'m
|
2023
£'m
|
|
|
|
|
Cash generated from operations
|
13
|
57.8
|
50.5
|
Net finance costs
|
|
(17.8)
|
(8.6)
|
Income taxes paid
|
|
(2.0)
|
(8.3)
|
Net cash generated from operations
|
|
38.0
|
33.6
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
Purchase of property, plant and
equipment and non-acquisition intangibles
|
|
(14.4)
|
(16.4)
|
Disposal of property, plant and
equipment
|
|
1.4
|
1.4
|
Contingent consideration
received
|
|
4.3
|
-
|
Purchase of subsidiary undertakings
net of cash acquired
|
7
|
(31.7)
|
(59.0)
|
Cash flows used in investing activities
|
|
(40.4)
|
(74.0)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from share
issues
|
|
1.5
|
-
|
Utilisation of debt
facility
|
|
51.3
|
65.0
|
Repayment of debt
facility
|
|
(36.3)
|
(14.0)
|
Repayment of debt upon purchase of
subsidiary undertakings
|
|
(0.5)
|
(0.5)
|
Lease repayments
|
|
(11.9)
|
(11.1)
|
Settlement of contingent
consideration
|
|
(2.5)
|
-
|
Net cash generated in financing activities
|
|
1.6
|
39.4
|
|
|
|
|
Net (decrease) in cash and cash
equivalents in relation to continuing operations
|
|
(0.8)
|
(1.0)
|
Cash and cash equivalents at start
of year
|
|
30.2
|
31.2
|
Cash and cash equivalents in
relation to discontinued operations
|
|
(55.2)
|
-
|
Cash and cash equivalents at the end of year
|
|
(25.8)
|
30.2
|
|
|
|
|
Cash and cash equivalents shown above
comprise:
|
|
|
|
Cash at bank
|
|
-
|
30.2
|
Bank overdrafts
|
10
|
(25.8)
|
-
|
Notes to the financial information for the year ended 31 March
2024
1. Basis of Preparation
Basis of preparation
This preliminary announcement has
been prepared in accordance with the recognition and measurement
requirements of UK-adopted international accounting standards
(IFRS) and the Companies Act 2006 and the applicable legal
requirements of the Companies Act 2006.
The financial information for the
year ended 31 March 2024 and 31 March 2023 does not constitute
statutory financial information as defined in Section 434 of the
Companies Act 2006 and does not contain all of the information
required to be disclosed in a full set of IFRS financial
statements. Statutory accounts for the year ended 31 March 2023
have been delivered to the registrar of companies and those for the
year ended 31 March 2024 will be delivered to the registrar in due
course. This announcement was approved by the Board of Directors
and authorised for issue on 22 July 2024. Statutory accounts for
the year ended 31 March 2024 have not yet been reported on by the
Group's Independent Auditor, RSM UK Audit LLP.
The consolidated preliminary
results are presented in pounds sterling and, unless stated
otherwise, shown in pounds million to one decimal place.
Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance, financial position, its cash flows, liquidity
position, principal risks and uncertainties affecting the business
are set out in the Business Review.
The Group meets its day-to-day
working capital requirements through its financing facilities which
were due to expire in February 2025 but were fully extinguished on
5 June 2024 following the Divestment.
On 24 June 2024, a new financing
facility was put in place allowing the Group to draw up to a
maximum of £100 million subject to certain covenants. To date there
have been no drawdowns against the facility. Given that the
underlying business is cash generating and having considered FY25
budgets and FY26 forecasts, the Directors are comfortable that the
Group has adequate resources to meet its ongoing financing
requirements.
Details of the Group's borrowing
facilities are given in note 10 of the financial information. The
Group's budget for 2025 and forecasts for 2026, show that the Group
should be able to operate within the level of its new facility and
comply with the relevant covenants.
The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for a period of at least 12 months from the
approval date of this report and accordingly they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements. In making this assessment, the Directors have
considered the financing arrangements available to the Group and
the Group's cashflow forecasts, taking into account significant but
plausible downside trading scenarios
2. Segmental analysis
The Group has been organised into
two main reporting segments, Occupational Health ("OH") and
Testing, Inspection & Certification ("TIC"). At each
reporting date, the Group reviews its reporting segments to
determine if the segment disclosure continues to be
appropriate.
As described in the business
review, the Board announced in February 2024 that it had entered
into a binding agreement for the sale of certain Governance, Risk
& Compliance ("GRC") software and services assets. This
included all assets from the Worknest, Health and Safety compliance
and Elogbooks operating segments. The disposal completed on
31 May 2024 and the disposal group assets were classified as held
for sale at 31 March 2024 and trading results classified as
discontinued operations.
During the year, there has not
been a significant change to the underlying nature of the retained
business, nor did the impact of acquisitions change this. However,
the disposal noted above has resulted in a change to the reportable
segments with Occupational Health being the only operating segment
continuing in the GRC division. Other than this, the results and
economic characteristics of the business remains consistent with
the prior year and therefore continuing to disclose the reportable
segments consistently is appropriate for FY24. Given the disposal,
however for clarity the continuing GRC segment has been renamed
Occupational Health ("OH").
Services per segment as described
in the business review. The key profit measures are revenue,
adjusted EBITDA and adjusted profit before tax and are shown before
acquisition and disposal costs, restructuring costs, amortisation
of acquired intangibles, fair value gains/losses in contingent
consideration, acquisition related incentive schemes, and share
based payments and legacy long-term incentives.
The vast majority of trading of
the Group is undertaken within the United Kingdom. Segment assets
include intangibles, property, plant and equipment, inventories,
receivables and cash. Central assets include deferred tax and head
office assets. Segment liabilities comprise operating liabilities.
Central liabilities include deferred tax, corporate borrowings and
head office liabilities. Capital expenditure comprises additions to
application software, property, plant and equipment. Segment assets
and liabilities are allocated between segments on an actual
basis.
|
2024
|
2023
|
|
TIC
|
OH
|
Head
Office
|
Total
|
TIC
|
OH
|
Head
Office
|
Total
|
Continuing operations
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
Revenue
|
303.7
|
112.1
|
-
|
415.8
|
276.6
|
116.7
|
-
|
393.3
|
Inter-segment
elimination
|
(11.4)
|
(1.5)
|
-
|
(12.9)
|
(10.3)
|
(1.1)
|
-
|
(11.4)
|
Revenue from external
customers
|
292.3
|
110.6
|
-
|
402.9
|
266.3
|
115.6
|
-
|
381.9
|
Segment adjusted operating
profit/(loss)
|
23.2
|
13.6
|
(4.7)
|
32.1
|
23.4
|
18.0
|
(5.4)
|
36.0
|
Acquisition and disposal costs
(including strategic review costs)
|
|
|
|
(5.1)
|
|
|
|
(1.4)
|
Restructuring costs
|
|
|
|
(14.6)
|
|
|
|
(15.2)
|
Amortisation of acquired
intangibles
|
|
|
|
(13.2)
|
|
|
|
(12.2)
|
Share based payments (excluding
SAYE schemes) and legacy long-term incentives
|
|
|
|
0.8
|
|
|
|
(1.7)
|
Fair value gains/(losses) in
contingent consideration and acquisition related incentive
schemes
|
|
|
|
(5.0)
|
|
|
|
(2.2)
|
Operating (loss)/profit
|
|
|
|
(5.0)
|
|
|
|
3.3
|
Finance costs
|
|
|
|
(11.8)
|
|
|
|
(6.9)
|
Exceptional finance
costs
|
|
|
|
(0.1)
|
|
|
|
(0.9)
|
Loss before tax
|
|
|
|
(16.9)
|
|
|
|
(4.5)
|
Tax credit
|
|
|
|
3.2
|
|
|
|
2.8
|
Loss after tax
|
|
|
|
(13.7)
|
|
|
|
(1.7)
|
|
|
|
|
|
|
|
|
|
Segment assets
|
89.3
|
23.4
|
379.4
|
492.1
|
152.2
|
38.9
|
575.1
|
766.2
|
Segment liabilities
|
(79.6)
|
(24.8)
|
(266.1)
|
(370.5)
|
(58.5)
|
(22.8)
|
(284.2)
|
(365.5)
|
Capital expenditure
|
(3.8)
|
(3.1)
|
-
|
(6.9)
|
(5.7)
|
(1.1)
|
(0.2)
|
(7.0)
|
Depreciation and
amortisation
|
(12.0)
|
(4.5)
|
(13.6)
|
(30.1)
|
(10.9)
|
(3.8)
|
(24.4)
|
(39.1)
|
|
2024
|
2023
|
|
GRC
|
Total
|
GRC
|
Total
|
Discontinued operations
|
£'m
|
£'m
|
£'m
|
£'m
|
Revenue
|
102.8
|
102.8
|
86.1
|
86.1
|
Inter-segment
elimination
|
(2.5)
|
(2.5)
|
(2.3)
|
(2.3)
|
Revenue from external
customers
|
100.3
|
100.3
|
83.8
|
83.8
|
Segment adjusted operating
profit
|
33.3
|
33.3
|
28.3
|
28.3
|
Acquisition and disposal costs
(including strategic review costs)
|
|
(2.7)
|
|
(1.3)
|
Restructuring costs
|
|
(3.6)
|
|
(5.9)
|
Amortisation of acquired
intangibles
|
|
(12.4)
|
|
(11.8)
|
Fair value (losses) in contingent
consideration and acquisition related incentive schemes
|
|
-
|
|
(6.2)
|
Operating profit
|
|
14.6
|
|
3.1
|
Finance costs
|
|
(6.8)
|
|
(3.8)
|
Exceptional finance
costs
|
|
(1.8)
|
|
(1.7)
|
Profit/(loss) before
tax
|
|
6.0
|
|
(2.4)
|
Tax (charge)/credit
|
|
(2.5)
|
|
0.3
|
Profit/(loss) after tax
|
|
3.5
|
|
(2.1)
|
|
|
|
|
|
Segment assets
|
398.2
|
398.2
|
85.2
|
85.2
|
Segment liabilities
|
(82.3)
|
(82.3)
|
(42.6)
|
(42.6)
|
Capital expenditure
|
(7.6)
|
(7.6)
|
(9.4)
|
(9.4)
|
Depreciation and
amortisation
|
(16.4)
|
(16.4)
|
(3.1)
|
(3.1)
|
The revenue from external
customers was derived from the Group's principal activities
primarily in the UK (where the Company is domiciled).
Reconciliation of segment adjusted operating profit to
adjusted EBITDA
|
2024
|
2023
|
|
TIC
|
OH
|
Head
Office
|
Total
|
TIC
|
OH
|
Head
Office
|
Total
|
Continuing operations
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
£'m
|
Segment adjusted operating
profit/(loss)
|
23.2
|
13.6
|
(4.7)
|
32.1
|
23.4
|
18.0
|
(5.4)
|
36.0
|
Depreciation and amortisation of
non-acquisition intangibles
|
12.0
|
4.5
|
0.4
|
16.9
|
10.9
|
4.0
|
0.4
|
15.3
|
Adjusted EBITDA
|
35.2
|
18.1
|
(4.3)
|
49.0
|
34.3
|
22.0
|
(5.0)
|
51.3
|
|
2024
|
2023
|
|
GRC
|
Total
|
GRC
|
Total
|
Discontinued operations
|
£'m
|
£'m
|
£'m
|
£'m
|
Segment adjusted operating
profit
|
33.3
|
33.3
|
28.3
|
28.3
|
Depreciation and amortisation of
non-acquisition intangibles
|
4.0
|
4.0
|
3.1
|
3.1
|
Adjusted EBITDA
|
37.3
|
37.3
|
31.4
|
31.4
|
The above tables reconcile segment
adjusted operating profit/(loss) to adjusted EBITDA, which excludes
separately disclosed acquisition and other costs, to the standard
profit measure under IFRS (Operating Profit). This is the Group's
Alternative Profit Measure used when discussing the performance of
the Group. The Directors believe that adjusted EBITDA and operating
profit is the most appropriate approach for ascertaining the
underlying trading performance and trends as it reflects the
measures used internally by senior management for all discussions
of performance and also reflects the starting profit measure when
calculating the Group's banking covenants.
Adjusted EBITDA is not defined by
IFRS and therefore may not be directly comparable with other
companies' adjusted profit measures. It is not intended to be a
substitute, or superior to, IFRS measurements of profit.
Major
customers
For the year ended 31 March 2024,
no customers (2023: nil) individually accounted for more than 10%
of the Group's total revenue.
3. Adjusting items on continuing operations
Due to the nature of acquisition
and other costs in relation to each acquisition and the non-cash
element of certain charges, the Directors believe that adjusted
operating profit, adjusted EBITDA and adjusted measures of profit
before tax and earnings per share provide shareholders with a more
appropriate representation of the underlying earnings derived from
the Group's business and a more comparable view of the year-on-year
underlying financial performance of the Group. The adjusting items
shown on the consolidated statement of comprehensive income and the
rationale behind the Director's view that these should be included
as adjusting items are detailed below:
Adjusting item
|
Rationale
|
Acquisition and disposal costs
(including strategic review costs)
|
Acquisition and disposal costs
(including strategic review costs) totalled £5.1 million in the
year (2023: £1.4 million). During the first half of the year the
Group undertook a strategic review to assess the merits of a
potential separation of certain businesses across its TIC and GRC
Divisions. Strategic review costs include professional fees, legal
fees and staff costs. These costs are non-recurring and not
considered to be reflective of the underlying trading
performance.
|
Restructuring costs
|
Restructuring costs, being the
costs associated with the integration of acquisitions, remain a key
component of delivering shareholder value by increasing returns
made on acquired businesses. Restructuring costs for the year were
£14.6 million (2023: £15.2 million) reflecting the three key
integration programmes within Occupational Health, Fire and
Security and Water & Air Hygiene. These programmes are now
being finalised and we expect all restructuring expense to have
ceased by 30 September 2024.
Restructuring costs primarily
consist of:
· The
cost of duplicated staff roles during the integration and
restructuring period;
· The
implementation and redundancy cost of delivering the post
completion staff structures; and
· IT
costs associated with the integration and transfer to Group IT
systems, including costs of third- party software used in the
delivery of customer contracts where there is a programme to
transition such software to one of the Group's existing
platforms.
|
Amortisation of acquired
intangibles
|
The amortisation charge is
primarily in relation to acquired intangible assets resulting from
fair value adjustments under IFRS 3. Given the overall size of the
amortisation charge and it being non-cash in nature, this cost is
adjusted for in deriving the Group's alternative performance
measures. For transparency, we note that the Group does not
similarly adjust for the related revenue and results generated from
its business combinations in its alternative profit
measures.
|
Share-based payments (excluding
SAYE schemes) and legacy long-term incentives
|
Charges associated with
share-based payment schemes (excluding SAYE schemes which remain
are classed as administrative expenses) and legacy long-term
incentives have been included as adjusting items. Although
share-based compensation is an important aspect of the compensation
of our employees and executives, management believes it is useful
to exclude share-based compensation expenses from adjusted profit
measures to better understand the long-term performance of our
underlying business. Share-based compensation expenses are non-cash
charges and are determined using several factors, including
expectations surrounding future performance, employee forfeiture
rates and, for employee payroll-related tax items, the share price.
As a result, these charges are not reflective of the value
ultimately received from the awards.
|
Fair value losses in contingent
consideration and acquisition related incentive schemes
|
Movements in contingent
consideration are considered to be part of the investing activities
of the Group and are therefore not considered to be reflective of
the underlying trading performance. Further, share based
compensation expenses are not reflective of the value ultimately
received by the recipients of the awards. In addition, certain
legacy long terms incentives are considered to be part of the
investing activities of the Group and non-recurring in
nature.
|
Exceptional finance
costs
|
Exceptional finance costs of £0.1m
(2023: £0.9m) relate to the non-cash unwinding of the discount
applied to contingent consideration to reflect the time value of
money. Therefore, it is not considered part of the underlying
trading of the Group.
|
4. Taxation
|
Continuing
operations
|
Discontinued
operations
|
Total
|
|
2024
£'m
|
2023
£'m
|
2024
£'m
|
2023
£'m
|
2024
£'m
|
2023
£'m
|
Current tax:
|
|
|
|
|
|
|
UK corporation tax on loss for the
year
|
(0.1)
|
1.4
|
5.6
|
2.6
|
5.5
|
4.0
|
Foreign tax
|
0.1
|
0.1
|
0.7
|
0.3
|
0.8
|
0.4
|
Adjustment in respect of previous
periods
|
(0.7)
|
(0.6)
|
0.1
|
(0.1)
|
(0.6)
|
(0.7)
|
Total current tax
|
(0.7)
|
0.9
|
6.4
|
2.8
|
5.7
|
3.7
|
Deferred tax:
|
|
|
|
|
|
|
Current year
|
(3.7)
|
(3.9)
|
(3.1)
|
(3.0)
|
(6.8)
|
(6.9)
|
Adjustment in respect of previous
periods
|
1.2
|
0.2
|
(0.8)
|
(0.1)
|
0.4
|
0.1
|
Total deferred tax
|
(2.5)
|
(3.7)
|
(3.9)
|
(3.1)
|
(6.4)
|
(6.8)
|
Total tax (credit)/charge
|
(3.2)
|
(2.8)
|
2.5
|
(0.3)
|
(0.7)
|
(3.1)
|
The charge for the year can be
reconciled to the profit in the Consolidated Statement of
Comprehensive income as follows:
|
Continuing
operations
|
Discontinued
operations
|
Total
|
|
2024
£'m
|
2023
£'m
|
2024
£'m
|
2023
£'m
|
2024
£'m
|
2023
£'m
|
(Loss)/profit before
tax
|
(16.9)
|
(4.5)
|
6.0
|
(2.4)
|
(10.9)
|
(6.9)
|
(Loss)/profit before tax
multiplied by the rate of corporation tax of 25% (FY23:
19%)
|
(4.2)
|
(0.8)
|
1.5
|
(0.5)
|
(2.7)
|
(1.3)
|
Effects of:
|
|
|
|
|
|
|
Expenses not deductible for tax
purposes
|
0.4
|
(0.1)
|
2.1
|
1.0
|
2.5
|
0.9
|
Effect of foreign tax
|
(0.1)
|
0.1
|
(0.3)
|
(0.1)
|
(0.4)
|
-
|
Recognition of previously
unrecognised deferred tax assets on losses
|
-
|
(1.5)
|
-
|
-
|
-
|
(1.5)
|
Prior year adjustments
|
0.7
|
(0.4)
|
(0.8)
|
(0.2)
|
(0.1)
|
(0.6)
|
Change in tax rates
|
-
|
(0.1)
|
-
|
(0.5)
|
-
|
(0.6)
|
Tax (credit)/charge
|
(3.2)
|
(2.8)
|
2.5
|
(0.3)
|
(0.7)
|
(3.1)
|
In the Spring Budget 2021, the UK
Government announced that the corporation tax rate would increase
to 25% with effect from 1 April 2023. Deferred taxes at the
statement of financial position date have been remeasured at 25% as
the announced change has been enacted.
5. Earnings per ordinary share
Both the basic and diluted
earnings per share have been calculated using the profit
attributable to shareholders of the parent company (Marlowe plc) as
the numerator, i.e. no adjustments to profit were necessary in 2024
or 2023.
|
2024
|
2023
|
Group
|
|
|
Loss after tax for the
period
|
£(10.2)m
|
£(3.8)m
|
Basic earnings per
share
|
(10.6)p
|
(3.9)p
|
Fully diluted earnings per
share
|
(10.6)p
|
(3.9)p
|
Continuing
|
|
|
Loss after tax for the
period
|
£(13.7)m
|
£(1.7)m
|
Basic earnings per
share
|
(14.2)p
|
(4.9)p
|
Fully diluted earnings per
share
|
(14.2)p
|
(4.9)p
|
|
|
|
Weighted average number of shares
in issue
|
96,418,045
|
95,868,871
|
Potential dilution of share
options
|
-
|
-
|
Weighted average fully diluted
number of shares in issue
|
96,418,045
|
95,868,871
|
As at 31 March 2024, 579,564
options (2023: 1,291,637) were excluded from the diluted
weighted-average number of ordinary shares calculation for the
continuing operations because their effect would have been
anti-dilutive.
Adjusted earnings per share
The Directors believe that the
adjusted earnings per share provide a more appropriate
representation of the underlying earnings derived from the Group's
business. The adjusting items are shown in the table
below:
|
2024
£'m
|
2023
£'m
|
(Loss) before tax for the
period
|
(10.9)
|
(6.9)
|
Adjustments:
|
|
|
Acquisition and disposal costs
(including strategic review costs)
|
7.8
|
2.7
|
Restructuring costs
|
18.2
|
21.1
|
Amortisation of acquired
intangibles
|
25.6
|
24.0
|
Share-based payments (excluding
SAYE schemes)
|
(0.8)
|
1.7
|
Fair value losses in contingent
consideration and acquisition related incentive schemes
|
5.0
|
8.4
|
Exceptional finance
costs
|
1.9
|
2.6
|
Adjusted profit before tax for the period
|
46.8
|
53.6
|
The adjusted earnings per share,
based on weighted average number of shares in issue during the
year, is calculated below:
|
2024
|
2023
|
Adjusted profit before tax
(£'m)
|
46.8
|
53.6
|
Tax at 25% (2023: 19%)
|
(11.7)
|
(10.2)
|
Adjusted profit after taxation
(£'m)
|
35.1
|
43.4
|
Adjusted basic earnings per share
(pence)
|
36.4
|
45.3
|
Adjusted fully diluted earnings
per share (pence)
|
36.4
|
45.3
|
6. Dividends
On 3 June 2024, the Company
declared a special dividend in respect of the current year. The
dividend of £1.55 per Marlowe ordinary share amounted to £150.3m
and was paid on 5 July 2024.
7. Business Combinations
During the year the Group
completed five acquisitions to create shareholder value by adding
depth and breadth to the Group's compliance-based
platforms.
If the acquisitions had been
completed on the first day of the financial year, Group revenue
would have been £506.9m and Group loss before tax would have been
£10.3m. Post completion, the acquisitions made during the year
contributed £26.0m revenue and £4.3m profit before tax. As
explained in note 3, following acquisition a number of
restructuring costs are incurred, and after this post acquisition
restructuring the acquisitions have a positive impact on Group
profit before tax.
Goodwill acquired in the business
combinations represent a payment made by the acquirer in
anticipation of future economic benefits from assets that are not
capable of being individually identified and separately recognised.
Goodwill is not deductible for tax purposes. Acquisition balance
sheets are deemed provisional when the post-acquisition integration
period, typically up to 12 months post-acquisition, has yet to
complete.
Acquisition of Victory Fire
Limited
On 6 April 2023 the Group acquired
Victory Fire Limited ("Victory Fire"), a provider of fire &
security installation and maintenance services for a total
consideration of £6.6m, satisfied by the payment of £5.5m in cash
on completion, £0.1m payable subject to the satisfactory completion
of certain integration tasks and £1.0m payable subject to the
achievement of certain performance targets by the acquired business
12 months post-acquisition. The £1.0m contingent consideration
payable has been discounted to its present value of £0.8m by
applying the weighted average cost of capital used in the purchase
price allocation.
One hundred percent of the equity
of Victory Fire was acquired in this transaction. Deferred tax has
been provided on the value of the intangible assets at the tax rate
applicable at the time the asset is expected to be realised.
Acquisition costs of £0.1m have been charged to profit or
loss.
|
|
Fair value at
acquisition
|
|
|
£'m
|
Intangible assets - customer
relationships
|
|
1.1
|
Trade and other
receivables
|
|
0.3
|
Cash
|
|
2.1
|
Inventories
|
|
0.1
|
Property, plant and
equipment
|
|
0.1
|
Trade and other
payables
|
|
(0.2)
|
Deferred tax
liabilities
|
|
(0.3)
|
Tax liabilities
|
|
(0.1)
|
Net assets acquired
|
|
3.1
|
Goodwill
|
|
3.3
|
Consideration
|
|
6.4
|
Satisfied by:
|
|
|
Cash to vendors
|
|
5.5
|
Contingent cash consideration to
vendors
|
|
0.9
|
If the acquisition had been
completed on the first day of the financial year Victory Fire would
have contributed £2.0m revenue and £0.7m profit before
tax.
Post completion, the acquisition
of Victory Fire contributed £2.0m revenue and £0.7m profit before
tax.
Acquisition of Clymac
Limited
On 13 April 2023 the Group
acquired Clymac Limited ("Clymac"), a provider of fire installation
and maintenance services for a total consideration of £8.5m,
satisfied by the payment of £8.2m in cash on completion, £0.3m
payable subject to the satisfactory completion of certain
integration tasks by the acquired business 3 months
post-acquisition.
One hundred percent of the equity
of Clymac was acquired in this transaction. Deferred tax has been
provided on the value of the intangible assets at the tax rate
applicable at the time the asset is expected to be realised.
Acquisition costs of £0.1m have been charged to profit or
loss.
|
|
Fair value at
acquisition
|
|
|
£'m
|
Intangible assets - customer
relationships
|
|
4.8
|
Trade and other
receivables
|
|
1.9
|
Cash
|
|
0.4
|
Inventories
|
|
0.3
|
Right-of-use assets
|
|
0.1
|
Property, plant and
equipment
|
|
0.1
|
Trade and other
payables
|
|
(3.0)
|
Deferred tax
liabilities
|
|
(1.2)
|
Tax liabilities
|
|
(0.1)
|
Net assets acquired
|
|
3.3
|
Goodwill
|
|
5.2
|
Consideration
|
|
8.5
|
Satisfied by:
|
|
|
Cash to vendors
|
|
8.2
|
Contingent cash consideration to
vendors
|
|
0.3
|
If the acquisition had been
completed on the first day of the financial year Clymac would have
generated £11.1m revenue and £0.8m profit before tax.
Post completion, the acquisition
of Clymac contributed £11.1m revenue and £0.8m profit before
tax.
Acquisition of JCR Security
Limited
On 20 April 2023 the Group
acquired JCR Security Limited ("JCR Security"), a provider of fire
installation and maintenance services for a total consideration of
£0.7m, satisfied by the payment of £0.4m in cash on completion and
£0.3m payable subject to the achievement of certain performance
targets by the acquired business 36 months post-acquisition. The
£0.3m contingent consideration payable has been discounted to its
present value of £0.1m by applying the weighted average cost of
capital used in the purchase price allocation.
One hundred percent of the equity
of JCR Security was acquired in this transaction. Deferred tax has
been provided on the value of the intangible assets at the tax rate
applicable at the time the asset is expected to be realised.
Acquisition costs of £nil have been charged to profit or
loss.
|
|
Fair value at
acquisition
|
|
|
£'m
|
Intangible assets - customer
relationships
|
|
0.2
|
Trade and other
receivables
|
|
0.2
|
Cash
|
|
0.1
|
Trade and other
payables
|
|
(0.2)
|
Net assets acquired
|
|
0.3
|
Goodwill
|
|
0.2
|
Consideration
|
|
0.5
|
Satisfied by:
|
|
|
Cash to vendors
|
|
0.4
|
Contingent cash consideration to
vendors
|
|
0.1
|
If the acquisition had been
completed on the first day of the financial year JCR Security would
have generated £1.9m revenue and £0.5m profit before
tax.
Post completion, the acquisition
of JCR Security contributed £1.9m revenue and £0.5m profit before
tax.
Acquisition of Trans-Fire Holdings
Ltd
On 13 June 2023 the Group acquired
Trans-Fire Holdings Ltd ("Merryweather"), a provider of fire &
security maintenance services for a total consideration of £0.9m,
satisfied by the payment of £0.7m in cash on completion and £0.2m
payable subject to the achievement of certain performance targets
by the acquired business 6 months post-acquisition.
One hundred percent of the equity
of Merryweather was acquired in this transaction. Deferred tax has
been provided on the value of the intangible assets at the tax rate
applicable at the time the asset is expected to be realised.
Acquisition costs of £nil have been charged to profit or
loss.
|
|
Fair value at
acquisition
|
|
|
£'m
|
Intangible assets - customer
relationships
|
|
0.4
|
Trade and other
receivables
|
|
0.1
|
Cash
|
|
0.1
|
Deferred tax
liabilities
|
|
(0.1)
|
Net assets acquired
|
|
0.5
|
Goodwill
|
|
0.4
|
Consideration
|
|
0.9
|
Satisfied by:
|
|
|
Cash to vendors
|
|
0.7
|
Contingent cash consideration to
vendors
|
|
0.2
|
If the acquisition had been
completed on the first day of the financial year Merryweather would
have generated £0.8m revenue and £0.3m profit before
tax.
Post completion, the acquisition
of Merryweather contributed £0.4m revenue and £0.2m profit before
tax.
Acquisition of IMSM Holdings
Limited & International Management Systems Marketing
Limited
On 25 July 2023 the Group acquired
IMSM Holdings Limited & International Management Systems
Marketing Limited (together "IMSM"), a provider of ISO
certification and consultancy services for a total consideration of
£20.6m, satisfied by the payment of £15.6m in cash and issuance of
£3.0m of share-based consideration upon completion and £2.0m
payable subject to the achievement of certain performance targets
by the acquired business 12 months post acquisition. The £2.0m
contingent consideration payable has been discounted to its present
value of £1.7m by applying the weighted average cost of capital
used in the purchase price allocation.
One hundred percent of the equity
of IMSM was acquired in this transaction. Deferred tax has been
provided on the value of the intangible assets at the tax rate
applicable at the time the asset is expected to be realised.
Acquisition costs of £0.2m have been charged to profit or
loss.
|
|
Fair value at
acquisition
|
|
|
£'m
|
Intangible assets - customer
relationships
|
|
4.3
|
Intangible assets - trade
names
|
|
0.8
|
Trade and other
receivables
|
|
1.2
|
Cash
|
|
3.8
|
Property, plant and
equipment
|
|
0.1
|
Tax assets
|
|
0.3
|
Trade and other
payables
|
|
(2.1)
|
Deferred tax
liabilities
|
|
(1.3)
|
Net assets acquired
|
|
7.1
|
Goodwill
|
|
13.2
|
Consideration
|
|
20.3
|
Satisfied by:
|
|
|
Cash to vendors
|
|
15.6
|
Share-based
consideration
|
|
3.0
|
Contingent cash consideration to
vendors
|
|
1.7
|
If the acquisition had been
completed on the first day of the financial year IMSM would have
generated £13.9m revenue and £2.6m profit before tax.
Post completion, the acquisition
of IMSM contributed £10.6m revenue and £2.1m profit before
tax.
8. Trade and other receivables
|
2024
|
2023
|
|
£'m
|
£'m
|
Current
|
|
|
Trade receivables
|
69.2
|
81.9
|
Less: provision for impairment of
trade receivables
|
(2.1)
|
(1.9)
|
Trade receivables - net
|
67.1
|
80.0
|
Other receivables
|
1.0
|
2.8
|
Contract assets
|
3.1
|
2.1
|
Accrued income
|
20.9
|
22.8
|
Prepayments
|
5.9
|
8.1
|
Contingent consideration
receivable in less than one year
|
-
|
0.6
|
|
98.0
|
116.4
|
Non-current
|
|
|
Contingent consideration
receivable in more than one year
|
-
|
4.8
|
|
-
|
4.8
|
Contingent consideration
represented the divestment of non-core activities within the
Group's Air Quality business following the sale of Ductclean (UK)
Limited in March 2020 for a consideration of up to £7.0m and
additional amounts receivable on projects concluded before the
transaction. These were financial assets classified as measured at
fair value through profit or loss. As at 31 March 2024, the
contingent consideration amounted to £nil (2023: £4.8m). During the
year, a settlement agreement was made with the counterparty to
settle the outstanding amount of contingent
consideration.
Trade receivables, accrued income
and contract assets are provided for based on, and in accordance
with IFRS 9, an expected credit loss ("ECL") model. The Group have
utilised a simplified approach which is permitted by the standard,
which applies a credit risk percentage based against receivables
that are grouped in age brackets, which range from 18% of those
over 120 days past due to 1% of those between 0 and 30 days past
due. The expected credit loss percentages have been calculated by
reference to the credit losses experienced by age bracket in the
previous 12 months. These percentages have been reviewed against
our expectations of lifetime credit losses expected for certain
customers, alongside considering the expected future economic
outlook in the UK.
As at 31 March 2024, the remaining
balance of trade receivables which were past due, after applying
the ECL model to the age buckets was £33.6m (2023: £33.5m). No
further provision has been recognised on these amounts because it
has been deemed immaterial. These relate to a number of independent
customers with no recent history of default.
9. Trade and other payables
|
2024
|
2023
|
|
£'m
|
£'m
|
Current
|
|
|
Trade payables
|
29.1
|
33.7
|
Other taxation and social
security
|
15.0
|
19.9
|
Other payables
|
6.7
|
4.0
|
Accruals
|
22.4
|
28.9
|
Contract liabilities
|
7.5
|
28.7
|
Contingent consideration payable
in less than one year
|
2.8
|
8.0
|
|
83.5
|
123.2
|
Non-current
|
|
|
Contingent consideration payable
in one to three years
|
0.7
|
12.0
|
|
0.7
|
12.0
|
Trade and other payables
principally comprise amounts outstanding for trade purchases,
ongoing costs and contingent consideration. Included within
accruals is £9.9m (2023: £8.6m) in respect of Long Term Incentive
Plans.
Contingent consideration consists
of the following amounts payable in respect of previous
acquisitions:
|
2024
|
2023
|
|
£'m
|
£'m
|
Core Stream
|
-
|
12.0
|
VinciWorks
|
-
|
1.8
|
Skill Boosters
|
-
|
1.5
|
Optima
|
1.1
|
-
|
Victory Fire
|
1.3
|
-
|
JCR
|
1.1
|
-
|
Other (comprising 17 acquisitions
in FY23)
|
-
|
4.7
|
|
3.5
|
20.0
|
At 31 March 2024, contingent
consideration of £16.3m (2023: £nil) in respect of the disposal
group had been reclassified as discontinued operations and shown
within liabilities held for sale.
10. Net debt and borrowing facilities
|
2024
£'m
|
2023
£'m
|
Continuing
Operations:
|
|
|
Cash at bank and in
hand
|
-
|
30.2
|
Bank overdrafts due within one
year
|
(25.8)
|
-
|
Bank loans due within one
year
|
(206.0)
|
-
|
Bank loans due after one
year
|
-
|
(191.0)
|
Leases due within one
year
|
(9.4)
|
(9.7)
|
Leases due after one
year
|
(16.9)
|
(18.4)
|
Net debt for continuing operations
|
(258.1)
|
(188.9)
|
Discontinuing
Operations:
|
|
|
Cash at bank and in
hand
|
55.2
|
-
|
Leases due within one
year
|
(0.1)
|
-
|
Leases due after one
year
|
(0.2)
|
|
Net debt for total Group
|
(203.2)
|
(188.9)
|
Borrowing facilities
At 31 March 2024, the Group has a
£180m revolving credit facility and an additional accordion
facility of £60m with HSBC UK Bank plc, National Westminster Bank
plc, Citibank, N.A., Credit Industriel et Commercial, Fifth Third
Bank, and The Governor and Company of the Bank of Ireland which was
due to expire on 9 February 2025. £206m of the total facility
was drawn as at 31 March 2024. All of the Group's borrowings are in
sterling.
Following the disposal of the GRC
business this facility was repaid in full on 5 June 2024 and fully
extinguished.
On 24 June 2024, the Group entered
into a new unsecured 3-year Revolving Credit Facility (RCF) for
£50m with Barclays Bank PLC and HSBC UK Bank plc. The RCF includes
two 1-year extension options and an uncommitted accordion facility
of £50m.
11. Called up share capital
|
2024
|
2023
|
|
£'m
|
£'m
|
Allotted, issued and fully
paid:
|
|
|
96,807,718 ordinary shares of 50p
each (2023: 95,882,065 ordinary shares of 50p each)
|
48.4
|
47.9
|
The issued ordinary share capital
is as follows:
|
Allotted, issued and fully
paid
|
Number of ordinary
shares
|
Issue
price
|
|
£'m
|
|
|
1
April 2022
|
47.9
|
95,833,853
|
|
11 April 2022 - Share Options
("SAYE 2020")
|
|
1,630
|
460p
|
26 April 2022 - Share Options
("SAYE 2020")
|
|
2,065
|
460p
|
23 May 2022 - Share Options ("SAYE
2020")
|
|
923
|
460p
|
4 July 2022 - Marlowe plc Long
Term Incentive Plan 2019
|
|
37,879
|
50p
|
5 July 2022 - Share Options ("SAYE
2020")
|
|
1,173
|
460p
|
18 August 2022 - Share Options
("SAYE 2020")
|
|
413
|
460p
|
19 October 2022 - Share Options
("SAYE 2020")
|
|
1,195
|
460p
|
24 November 2022 - Share Options
("SAYE 2020")
|
|
2,934
|
460p
|
31 March 2023
|
47.9
|
95,882,065
|
|
18 August 2023 - Share-based
consideration for IMSM acquisition
|
|
597,609
|
502p
|
11 August 2023 - Share Options
("SAYE 2020")
|
|
2,217
|
460p
|
2 October 2023 - Share Options
("SAYE 2020")
|
|
211,141
|
460p
|
9 October 2023 - Share Options
("SAYE 2020")
|
|
16,256
|
460p
|
16 October 2023 - Share Options
("SAYE 2020")
|
|
5,789
|
460p
|
23 October 2023 - Share Options
("SAYE 2020")
|
|
12,438
|
460p
|
30 October 2023 - Share Options
("SAYE 2020")
|
|
10,129
|
460p
|
13 November 2023 - Share Options
("SAYE 2020")
|
|
10,332
|
460p
|
27 November 2023 - Share Options
("SAYE 2020")
|
|
26,878
|
460p
|
14 March 2024 - Share Options
("SAYE 2020")
|
|
22,693
|
460p
|
18 March 2023 - Share Options
("SAYE 2020")
|
|
10,171
|
460p
|
31 March 2024
|
48.4
|
96,807,718
|
|
12. Share premium
|
2024
|
2023
|
|
£'m
|
£'m
|
1 April
|
384.8
|
384.8
|
Premium on shares issued during
the year
|
1.4
|
-
|
Cancellation of share
premium
|
(384.9)
|
-
|
31 March
|
1.3
|
384.8
|
In the year, the Company gained
shareholder and court approval to release £384.9m (2023: £nil) from
the share premium account to retained earnings.
13. Cash generated from operations
|
2024
|
2023
|
|
£'m
|
£'m
|
|
|
|
Loss before tax
|
(10.9)
|
(6.9)
|
Depreciation of property, plant
and equipment, depreciation of right-of-use assets and amortisation
of non-acquisition intangibles
|
20.9
|
18.4
|
Amortisation of acquired
intangibles
|
25.6
|
24.0
|
Loss on sale of fixed
assets
|
(0.2)
|
-
|
Share based payments (excluding
SAYE schemes)
|
(0.8)
|
1.7
|
Fair value losses in contingent
consideration and acquisition related incentive schemes
|
5.0
|
8.4
|
Net finance costs
|
20.5
|
13.3
|
Increase in inventories
|
-
|
(1.7)
|
Increase in trade and other
receivables
|
(1.2)
|
(12.0)
|
Increase in trade and other
payables
|
(1.1)
|
5.3
|
Cash generated from operations
|
57.8
|
50.5
|
14. Related party transactions
There were no related party
transactions during the current or prior period.
15.
Post balance sheet events
Disposal of certain GRC Software & Service
Assets
On the 3 June 2024, the Group
announced the completion of the sale of certain GRC Software &
Service Assets ("The Divestment") for an Enterprise value of
£430m.
Return of capital
On the 5 July 2024 and following
receipt of the cash proceeds of the Divestment, the Group paid a
special dividend of £1.55 per Marlowe ordinary share equating to
£150.3m. Additionally, the Group commenced a share buyback
programme on the 5 July 2024, to return up to £75m to Marlowe
shareholders ("Buyback Programme"). The terms of the Buyback
Programme were announced by the Company on 22 May 2024.
As at the 19 June 2024, the Group,
as part of the Buyback Programme, has bought 7,364,035 ordinary
shares of 50 pence each in the capital of the Company for a
weighted average price of 458.16 pence for a total price of £30.9
million. The shares acquired will, in due course, be
cancelled.