Marlowe shares tank after H1 results show £9m loss

The company reported a pre-tax loss of £8.9m for the six months to 30 September, down from a profit of £1.7m the year before, which it put down to the non-cash increased amortisation of acquisition-related intangibles, movement in deferred consideration on historic acquisitions and a significant non-recurring investment in integration activities.

Adjusted operating profit, which excludes these one-off costs, improved 9% to £33m. Revenues were up 13% year-on-year at £251.3m, with organic growth coming in at 6%.

Shares were down nearly 15% in early deals at 429.75p.

Marlowe ended the first half with net debt of £192.7m, up from £160.8m at the start of the period, taking its net debt/adjusted EBITDA gearing ratio to 2.3x, from just below 2.0x, as a result of M&A activity.

However, cash generation in the second half will be used to cut leverage to "around 2x" by the end of the year, with the target being "below 2x" in the medium term.

Marlowe kicked off a strategic review during the first half, to look at "the optimal organisational and capital structure for the business". This, it said, could result in a managed separation of certain group businesses, but the outcome of the review has not yet been disclosed.

"The group delivered a good performance against a challenging macroeconomic backdrop in the first half of the year with organic growth of 6% demonstrating the resilience of our business and the markets we serve," said chief executive Alex Dacre.

"We have made a good start to the second half of the year and expect to see mid single digit organic growth supported by additional growth from acquisitions and continued double-digit growth in adjusted EBITDA."