Marlowe posts full-year results in line with forecasts

Business safety and regulatory compliance specialist Marlowe reported a set of preliminary full-year unaudited results in line with market expectations on Tuesday.

The AIM-traded firm said it achieved an 8% increase in revenue to £503.2m for the 12 months ended 31 March, driven by organic growth and contributions from bolt-on acquisitions.

Its statutory operating profit was £9.6m, but it reported a loss before tax of £10.9m due to higher finance costs and restructuring expenses amounting to £26m.

Statutory losses per share increased to 10.6p, from 3.9p in 2023.

The group maintained a strong balance sheet, reducing net debt to £176.6m by the end of March, from £192.7m at the end of September last year.

Following a divestment, a £150m special dividend payment, and a share buyback programme, the group now had a material net cash balance.

Adjusted net cash generated from operations was £83.8m, compared to £74.3m in the prior year.

Continuing operations saw a revenue increase of 5% to £402.9m, with the TIC division growing 10% to £292.3m, driven by 4% organic growth.

The occupational health division experienced a 4% decline in revenue to £110.6m due to short-term contract losses, but secured £13.8m in new business since the start of the 2024 financial year.

Adjusted EBITDA from continuing operations decreased 4% to £49m, with margins dropping to 12.2% from 13.4% in the 2023 financial year.

The decline was attributed to contract losses in occupational health and increased use of subcontractors in TIC.

Marlowe said the statutory operating loss from continuing operations was £5m, primarily due to short-term revenue reduction and margin impacts.

The company said it invested £16m in four bolt-on acquisitions in fire safety and security during 2024 and made significant progress in integration programmes.

It said it expected all restructuring costs to end by 30 September.

Looking ahead, Marlowe anticipated mid-single-digit organic revenue growth, driven by its TIC division.

Occupational health revenue was expected to remain flat in the 2025 financial year, balancing contract losses with new wins.

The company said it had made progress with its share buyback programme, acquiring 7,364,035 shares for £30.9m as of 19 July.

It added that it planned to use remaining net cash proceeds from the divestment for further capital returns or strategic bolt-on acquisitions.

“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,” said interim non-executive chair Lord Ashcroft.

“The enterprise value of £430m 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.”

Lord Ashcroft said that within TIC, the firm implemented testing and inspection regimes to certify business premises and ensure critical systems were safe and compliant across fire safety and security, and water and 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.”

At 1200 BST, shares in Marlowe were down 1.03% at 448.35p.

Reporting by Josh White for Sharecast.com.