TIDMMRL
RNS Number : 3493H
Marlowe PLC
03 December 2020
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. Upon the
publication of this announcement via Regulatory Information
Service, this inside information is now considered to be in the
public domain.
3 December 2020
MARLOWE PLC
Half Year Results FY 2021
Marlowe plc ("Marlowe", the "Company" or the "Group"), the
specialist services group focused on developing companies which
assure safety and regulatory compliance, announces its unaudited
results for the six-month period ended 30 September 2020 ("Interim
Report").
ADJUSTED RESULTS
-
Continuing operations H1 FY2021 H1 FY2020 % Change
Revenue GBP83.3m GBP77.8m* 7%
EBITDA(1,2) GBP11.5m GBP9.9m 16%
Operating profit(2) GBP7.4m GBP6.8m 8%
Profit before tax(2) GBP6.7m GBP6.2m 8%
Earnings per share
- basic(2) 10.7p 11.3p (5)%
Net debt(3) GBP1.6m GBP19.6m
*Excluding non-core air quality activities
disposed of in March 2020
(1) Earnings before interest, taxes, depreciation
and amortisation ("EBITDA")
(2) Refer to Note 2 of the Interim Report
for a reconciliation between adjusted and
statutory results. Further information about
"Non-IFRS measures" and why we believe they
are important for an understanding of the
performance of the business is provided in
the Chief Executive's Review
(3) Excluding IFRS 16 lease liabilities
STATUTORY RESULTS
- Continuing operations H1 FY2021 H1 FY2020
---------- ---------
Revenue GBP83.3m GBP87.4m
Operating profit GBP1.3m GBP0.9m
Profit before tax GBP0.6m GBP0.3m
Earnings per share
- basic 0.8p 0.0p
Net debt GBP17.2m GBP32.0m
Financial Highlights
- Resilient model : H1 revenue of GBP83.3 million up 7%,
excluding impact of non-core activities disposed of in March
2020
- COVID-19 related site-access disruption, predominantly in Q1,
resulted in an 8% like-for-like decline in revenues during the
period; organic growth trajectory remains on track demonstrating
the resilient and defensive nature of our platform for growth, with
current run rate revenues in excess of GBP225 million
- Margin expansion : Adjusted EBITDA up 16% to GBP11.5 million
with Group divisional adjusted EBITDA margin increasing from 12.3%
to 14.8%
- Risk & Compliance adjusted EBITDA margin increased to
14.9% (H1 FY2020: 12.3%) and Water & Air to 14.6% (2020:
11.9%)
- Adjusted EPS down 5%, following short-term dilution of the
oversubscribed placing in H1 to raise GBP40 million
- Strong free cash flow : Net cash generated from operating
activities, before acquisition and restructuring costs, of GBP18.8
million (H1 FY2020: GBP3.2 million)
- Significantly improved operating cash conversion of 122%
(FY2020: 83%), excluding any benefit of COVID-19 related deferrals
of VAT and payroll taxes
- Strong balance sheet : Net debt (excluding IFRS 16 lease
liabilities) at 30 September 2020 GBP1.6 million (2019:
GBP19.6m)
- Further placing, post-period end, to raise an additional GBP30
million to fund acquisition of Ellis Whittam and provide additional
resources to fund the Group's acquisition-led growth strategy
- Recent completion of refinancing , new three-year GBP70
million revolving credit facility and an additional accordion
facility of GBP20 million
Operational Highlights
- Major acquisitions: Elogbooks, a leading provider of
contractor management software and services, marking the next step
in our strategy to deliver integrated technology and services to
enhance the compliance, safety and upkeep of our clients'
premises
- Post-period end acquisition of Ellis Whittam, transforms our
scale and capabilities in Employment Law, HR Compliance and Health
& Safety advisory
- Four additional acquisitions in H1 across Fire & Security,
Water Hygiene, HR & Employment Law and Health & Safety. Two
further Occupational Health acquisitions since the period end
- Strategic transformation: Our Group now spans growing and
attractive UK regulatory compliance service and software
sectors:
o We help businesses to look after the safety, health, wellbeing
and compliance of their operations and employees across Health
& Safety, HR, Employment Law & Occupational Health
consulting, assurance & software services
o We help organisations to ensure their workplaces and business
premises are safe, efficient and compliant across Health &
Safety, Fire Safety, Water & Air Hygiene alongside our related
digital proposition
- Non-discretionary compliance regulations : Despite some
disruption due to site-access issues during Q1, continued
underlying growth in recurring revenues during H1
- Expertise in Integration & Digital : Integration
programmes across our divisions progressing to plan including the
Quantum integration into William Martin and the Clearwater
integration into WCS Group, which have both been executed
successfully with significant synergies realised
- Meridian software developments and Elogbooks digital integrations proceeding to plan
- Significant, margin-enhancing (c.260 basis points),
improvements in productivity and operational efficiency
- Following the completion of the Ellis Whittam acquisition, the
integration of Law At Work and Ellis Whittam will now commence
Current trading and outlook
- Strong start to the second half with organic growth trajectory remaining on track
- Run-rate revenues in excess of GBP225 million with 83% recurring revenues
- Positive structural trends across our markets with increased
corporate and societal focus on health, safety, wellbeing and
compliance
- Strong pipeline of earnings-enhancing acquisitions to add
further scale and breadth to our platform for growth
- COVID-19 is no longer having a material impact on our business
with H2 performance expected to deliver in line with pre-COVID
expectations
Commenting on the results Alex Dacre, Chief Executive, said:
"We are pleased to report both a resilient performance and
significant strategic and operational progress in the first
half.
Despite the challenges presented by COVID-19, we have continued
to implement our strategy at pace. Our business model has
demonstrated its defensive qualities and we made strong operational
progress in the period, with significant margin expansion, the
successful execution of integration programmes and enhanced cash
generation. The acquisitions of the software platform Elogbooks,
alongside six further bolt-ons, and the post-period-end acquisition
of Ellis Whittam, mark a further step in our strategy of providing
our clients with a comprehensive approach to their regulatory
compliance needs.
Our Group has undergone a transformation, in scope, scale and
quality of earnings since its formation - we are uniquely
positioned to deliver a one-stop approach to our clients' health,
safety and regulatory compliance needs; from software and digital
applications, assurance and consultancy, through to the full
implementation of recurring testing, inspection and compliance
programmes.
Our organic growth trajectory remains on track. We have made a
strong start to the second half and look forward to delivering
further profitable growth."
For further information: www.marloweplc.com
Marlowe plc 0203 813 8498
Alex Dacre, Chief Executive IR@marloweplc.com
Mark Adams, Group Finance Director
Cenkos Securities (Nominated Adviser & Joint
Broker) 0207 397 8900
Nicholas Wells
Ben Jeynes
Harry Hargreaves
Joh. Berenberg, Gossler & Co. KG, London
Branch (Joint Broker)
Mark Whitmore 0203 207 7800
Ben Wright
Yudith Karunaratna
FTI Consulting 0203 727 1340
Nick Hasell
Alex Le May
CHIEF EXECUTIVE'S REVIEW
Strategic Model
The transformation in scope, scale and quality of earnings that
Marlowe has undergone since its formation in 2016 has been
extensive. Our activities now span the full UK regulatory
compliance arena and we can deliver a comprehensive one-stop
approach to our clients' health, safety and regulatory compliance
needs; from software and digital applications, assurance and
consultancy, through to the full implementation of recurring
testing, inspection and compliance programmes to manage risk. We
help in the region of 30,000 UK organisations to ensure their
premises are safe, efficient and compliant whilst assuring the
health, wellbeing and compliance of their operations and
employees.
Our compliance software platforms are used by numerous UK
organisations to manage their health and safety obligations and to
assure the performance and compliance of their premises and supply
chain. Our assurance business streams provide advice, consultancy,
audit and assessments to assist clients in ensuring that they
adhere to strict compliance obligations across health and safety,
HR, employment law and occupational health. Our field-based
compliance business lines implement recurring service programmes to
ensure that our clients' premises are operating safely, efficiently
and in compliance with numerous health and safety, water and air
hygiene, and fire safety and security regulations.
Strong operational progress
Our financial year commenced in the week following the start of
the first national lockdown across the UK. Our resilient
performance through the first half of the year has demonstrated
both the defensive nature of our business model and the agility of
our platform for growth. We were particularly pleased with our
operational and strategic progress in generating significant growth
in profits, further underlying organic growth, margin expansion
across both divisions and strong cash conversion following the
successful delivery of our integration programmes, productivity and
efficiency improvements and effective working capital management.
Excluding the impact of the disposal of non-core activities in
March 2020, we delivered revenue growth of 7% on the prior year,
despite the access issues we faced due to the closure of businesses
and sites during the first quarter of our financial year, which
resulted in an 8% decline in like-for-like revenue. This revenue
decline arose due to site access issues at temporarily closed sites
which resulted in a backlog of available work, some of which we
expect to contribute to revenues in later months of our financial
year. The services that we provide are essential to our clients'
operations and are invariably governed by regulations which require
that they are delivered in order for our clients to operate
compliantly and safely. This regulation and the essential nature of
our services ensure that our business is well-insulated from
economic cycles and positioned us favourably throughout the first
half.
We now benefit from attractive scale and critical mass across
our Group with run-rate revenues in excess of GBP225 million
following the post-period end acquisition of Ellis Whittam, with
either market leadership or top three market positions across each
of our service lines. The quality of our revenues is high with
c.83% recurring year-on-year. O ur organic growth trajectory
remains on track and we expect to continue delivering growth
consistent with our targets in the high single digits. As a Group,
we continue to focus on service level enhancements, the deployment
of our proprietary software and technology, extending the duration
of our client relationships, deepening those relationships to
increase our clients' spend with us across multiple Group services
and continuing to promote our broad range of safety and regulatory
compliance capabilities to cross-sell additional services to our
clients. We benefit from an intrinsic advantage in this regard in
that we typically sell our services to similar people across our
different service lines and most of our clients have a need for the
majority of our services. The services we deliver are all
underpinned by ever-evolving regulations with increasing
enforcement burdens, and we continue to benefit from positive
structural trends resulting from an increased corporate and
societal focus on health, safety, wellbeing and compliance. We
believe we are favourably positioned to continue to benefit from
these trends.
Alongside the delivery of consistent organic growth, our
continued realisation of synergies and margin expansion through the
effective integration of acquired businesses alongside operational
improvement initiatives to improve productivity and operational
efficiencies is key to our strategy to create shareholder value. H1
adjusted EBITDA increased 16% to GBP11.5 million with our Group
adjusted EBITDA margin increasing 250 bps from 12.3% to 14.8%.
Within Risk & Compliance our adjusted EBITDA margin increased
260 bps to 14.9% (H1 FY2020: 12.3%) as we continue to enhance
efficiency and productivity and complete integration programmes
such as the integration of Quantum Compliance into William Martin,
and Deminos and Solve HR into Law At Work, all of which are now
complete. This improvement can be seen in the 13% increase in
average revenue per day per fee earner within our Fire Safety
activities. This was achieved through the effective integration of
acquired businesses and the efficiencies that we are able to
deliver through the benefits of our operating platform and scale
and the associated route density efficiencies that we are now able
to achieve. Our scale and route density has been further enhanced
by the acquisitions of FSE Fire Safety in the second half of FY2020
and Morgan Fire in September 2020. Within Water & Air, our
adjusted EBITDA margin increased 270 bps to 14.6% (H1 FY2020:
11.9%), reflecting the synergies we have achieved from the
successful integration of Clearwater into WCS Group, alongside a
broad-based improvement in the effectiveness and productivity of
our Water & Air operating model.
Group adjusted operating profit rose 8% to GBP7.4 million (H1
FY2020: GBP6.8 million), adjusted profit before tax increased 8% to
GBP6.7 million (H1 FY2020: GBP6.2 million) and, following the
oversubscribed placing to raise GBP40 million to fund the Elogbooks
acquisition and to provide additional resources to continue to
deliver our acquisition-led growth strategy, our adjusted earnings
per share decreased by 5% to 10.7p (H1 FY2020: 11.3p). In addition
to this placing, we completed a further placing to raise GBP30
million in October, the proceeds of which were used to fund the
acquisition of Ellis Whittam and to provide additional resources
for M&A. When combined with the debt facilities that we now
have available to us following our recent refinancing, this
provides significant further resources to support the Group's
ongoing targeted acquisition strategy and convert our deep pipeline
of further earnings-enhancing acquisition opportunities.
Further transformational growth delivered through
acquisitions
In addition to these operational improvements, we made further
strategic progress in both deepening and broadening our presence
across our compliance service and software markets. The acquisition
of Elogbooks in June marked the latest step in our strategy to
deliver integrated technology and services to enhance the
compliance, safety and upkeep of our clients' premises. Alongside
Meridian, our existing software platform, the addition of Elogbooks
enables us to offer our clients a complete technology-enabled
contractor management, compliance and health & safety solution.
The acquisition significantly expands the Group's digital
capabilities and service offering in providing our clients with
visibility and control over their service providers' performance
and compliance. We see considerable scope to deploy Elogbooks'
system and technology across our existing businesses to further
enhance the health, safety and compliance of our customers. The
business has traded strongly since acquisition and we have begun
work integrating the functionality of Elogbooks with Meridian, our
Health, Safety & Compliance software platform. Technology has
increasingly become a central part of our future growth strategy,
and a key service that we deliver to our clients. We currently
employ in the region of 50 technology & software professionals
who continually develop our software platforms to ensure that we
remain at the forefront of the compliance software market. The
deployment of our software significantly improves our clients'
compliance standards and customer experience, whilst
differentiating our proposition from much of our competition,
creating high switching costs and delivering highly attractive
financial returns for our shareholders.
The acquisition of Ellis Whittam, announced in October following
the period-end, transforms our scale and capabilities in Employment
Law, HR Compliance and Health & Safety advisory and
significantly advances our strategy to provide our clients with a
comprehensive one-stop approach to their health & safety and
regulatory compliance needs. Ellis Whittam's subscription-based
advisory services help employers across the UK remain compliant
with evolving employment law and health and safety legislation. The
business, which delivers subscription-based consultancy services,
supported by software, operates in an attractive and underserved
market where we see significant growth opportunities.
Our growth in the HR, Employment Law & Health and Safety
space in which Ellis Whittam operates is a clear example of the
strength and dynamism of the Marlowe model: alongside the William
Martin acquisition in December 2018, we acquired Nestor, a small
business operating in this space. Quickly identifying the
significant potential this market offered, the substantial synergy
with our strategy and the highly attractive investment
characteristics (a market growing at 9% a year, c. 90% subscription
revenues, high margins and excellent cash conversion) we decided to
look to build a business of scale. In December 2019, we acquired
Law At Work ("LAW"), and subsequently acquired and integrated two
further bolt-ons. The acquisition of Ellis Whittam ten months later
now gives us considerable scale in the market and the planned
merger of LAW and Ellis Whittam will create not only one of the
leading players in this fast-growing sector, but also a platform
for further considerable organic and acquisition-led growth.
Since the beginning of the year, we have made several further
bolt-on acquisitions:
- Fire safety specialist, Morgan Fire Protection
- Water hygiene specialist, Rainbow Water
- Occupational Health consultancies, Black & Banton, Wrightway Health and Caritas
- HR & Employment Law consultancy, Deminos
Our pipeline of earnings-enhancing acquisition opportunities
remains strong and M&A continues to be a fundamental component
of our strategy. We expect to continue to execute at a pace in the
second half of the financial year.
Looking ahead
Looking to the future, with run rate revenues now in excess of
GBP225 million and broad capabilities across the UK regulatory
compliance arena, we are uniquely positioned to work with our
clients across their risk management and compliance needs. We can
help businesses to look after the safety, health, wellbeing and
compliance of their operations and employees across Health &
Safety, HR, Employment Law & Occupational Health consulting,
assurance & software service. In addition, we help
organisations to ensure their workplaces and business premises are
safe, efficient and compliant across Health & Safety, Fire
Safety, Water & Air Hygiene alongside our related digital
proposition. This blend of technology, consultancy and assurance
services is compelling and highly attractive to our client
base.
We remain focused on continuing to deepen our leading positions
across our markets through further strong organic and fast paced
acquisition-led growth. Alongside this, we will continue to deliver
the operational and technological improvements, and the associated
margin expansion, that are key to our model.
INCOME STATEMENT
Revenue for the period ended 30 September 2020 was GBP83.3
million (H1 FY2020: GBP87.4 million). Excluding the impact of the
disposal of non-core activities in March 2020 that contributed
revenue of GBP9.6 million in H1 FY2020, revenue increased 7% in the
period. This reflects the contribution from acquisitions offset by
the COVID-19 related site-access issues that impacted revenue, in
particular during the first quarter.
Our key measures of profitability for the Group are adjusted
EBITDA and adjusted operating profit. The adjusted EBITDA for the
period was GBP11.5 million (H1 FY2020: GBP9.9 million) and adjusted
operating profit was GBP7.4 million (H1 FY2020: GBP6.8 million). On
a statutory basis, profit before tax from continuing operations was
GBP0.6 million (H1 FY2020: GBP0.3 million).
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 EBITDA and adjusted measures of
operating profit, profit before tax and earnings per share provide
shareholders with a useful representation of the underlying
earnings derived from the Group's businesses and a more comparable
view of the period-on-period underlying financial performance of
the Group.
A reconciliation between the statutory profit and the adjusted
performance measures noted above is shown below:
Profit Before Operating EBITDA
Continuing operations Tax GBP'm profit GBP'm GBP'm
----------------------------- -------------- -------------- -------
Statutory reported 0.6 1.3 7.6
Acquisition costs 0.6 0.6 0.6
Restructuring costs 2.4 2.4 2.4
Amortisation of acquisition
intangibles 2.2 2.2 -
Share-based payments 0.9 0.9 0.9
----------------------------- -------------- -------------- -------
Adjusted results 6.7 7.4 11.5
----------------------------- -------------- -------------- -------
STATEMENT OF FINANCIAL POSITION
Net assets at 30 September 2020 were GBP138.2 million (31 March
2020: GBP96.7 million) reflecting the proceeds of the GBP40 million
share placing in June and July 2020.
Net debt at 30 September 2020, including inter alia GBP15.6
million of lease liabilities as a result of the adoption of IFRS
16, was GBP17.2 million. Net debt at 30 September 2020, excluding
IFRS 16 lease liabilities, was GBP1.6m (31 March 2020: GBP32.3
million). Following the period end, the Group entered into a new
enlarged, three-year GBP70 million revolving credit facility with
an additional accordion facility of GBP20 million, providing
further resources to support the Group's ongoing targeted
acquisition strategy.
CASH FLOW
The net cash inflow from operating activities before acquisition
and restructuring costs in the period was GBP18.8 million (H1
FY2020: GBP3.2 million). This includes a working capital inflow of
GBP8.8 million (H1 FY2020: outflow GBP6.2 million) reflecting the
continued focus on working capital management in addition to the
Government's COVID-19 initiative permitting the deferral of VAT and
payroll taxes.
Cash conversion (being the ratio of cash generated from
operations, excluding IFRS 16 and any acquisition related flows, to
adjusted operating profit) adjusting for the COVID-19 related
deferrals of VAT and payroll taxes, was 122% (FY2020: 83%). Working
capital continues to be well managed with net working capital as a
percentage of revenue and debtor days both improving compared with
the position as at 31 March 2020.
NON-IFRS MEASURES
The Interim Report includes 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 operating
performance of the Group on a comparable 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. For further information on the reconciliation
between IFRS and non-IFRS measures refer to Note 2 and 4 of the
Notes to the Consolidated Interim Report.
PEOPLE
We welcome into the Group our new colleagues from the businesses
recently acquired. The Group has rapidly increased in scale since
its formation and now employs over 2,500 people, including highly
qualified teams of consultants, auditors, risk assessors,
technicians, engineers and employment lawyers who deliver our
services supported by experts across office-based support functions
around the country. During a very testing period, the health,
safety and wellbeing of all our employees has remained our top
priority and we have put in place appropriate safety protocols
across the Group. I am extremely proud of the collective efforts of
all our colleagues during this period. The Group's businesses
deliver services that are, in the main, provided by people and as
we build our businesses into market leaders we are relying on these
people to continue to demonstrate the drive, expertise and passion
that have been evident during the period. The strength of these
results reflects their contribution, and I would like to thank our
entire team for their hard work and dedication.
We launched an HMRC approved Save As You Earn scheme (the "2020
SAYE Scheme") during the period. Under the 2020 SAYE Scheme, which
was made available to all Marlowe employees, a total of 617
employees applied to participate in the scheme. We are delighted
that so many Marlowe employees have the opportunity to become
shareholders in the Company and have the benefit of access to the
2020 SAYE Scheme.
OUTLOOK
Our Group has undergone a transformation, in scope, scale and
quality of earnings since its formation - we are uniquely
positioned to deliver a comprehensive one-stop approach to our
clients' health, safety and regulatory compliance needs; from
software and digital applications, assurance and consultancy,
through to the full implementation of recurring testing, inspection
and compliance programmes.
Our organic growth trajectory remains on track. We have made a
strong start to the second half and look forward to delivering
further profitable growth .
Alex Dacre
Chief Executive 3 December 2020
Independent review report to Marlowe plc
Introduction
We have been engaged by the company to review the financial
information in the half-yearly financial report for the six months
ended 30 September 2020 which comprises the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Financial Position, the
Consolidated Statement of Cashflows and the related explanatory
notes. We have read the other information contained in the half
yearly financial report which comprises only the Chief Executive's
Review and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in Note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The financial information in the half-yearly
financial report has been prepared in accordance with the basis of
preparation in Note 1.
Our responsibility
Our responsibility is to express to the company a conclusion on
the financial information in the half-yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
The impact of macro-economic uncertainties on our review
Our review of the condensed set of financial statements in the
half-yearly financial report requires us to obtain an understanding
of all relevant uncertainties, including those arising as a
consequence of the effects of macro-economic uncertainties such as
Covid-19 and Brexit. Such reviews assess and challenge the
reasonableness of estimates made by the directors and the related
disclosures and the appropriateness of the going concern basis of
preparation of the financial statements. All of these depend on
assessments of the future economic environment and the group's
future prospects and performance.
Covid-19 and Brexit are amongst the most significant economic
events currently faced by the UK, and at the date of this report
their effects are subject to unprecedented levels of uncertainty,
with the full range of possible outcomes and their impacts unknown.
We applied a standardised firm-wide approach in response to these
uncertainties when assessing the group's future prospects and
performance. However, no review of interim financial information
should be expected to predict the unknowable factors or all
possible future implications for the group associated with these
particular events.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months ended 30 September
2020 is not prepared, in all material respects, in accordance with
the basis of accounting described in Note 1.
Use of our report
This report is made solely to the company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the company those matters we are required to state
to it in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
3 December 2020
Consolidated Statement of Comprehensive Income
For the six months ended
30 September 2020
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2020 2019* 2020
Note GBP'm GBP'm GBP'm
Revenue 2 83.3 87.4 185.4
Cost of sales (47.3) (51.9) (109.3)
Gross profit 36.0 35.5 76.1
Administrative expenses
excluding acquisition
and other costs (28.6) (28.7) (61.3)
Acquisition costs 2 (0.6) (0.6) (1.1)
Restructuring costs 2 (2.4) (3.2) (6.7)
Amortisation of acquisition
intangibles 2 (2.2) (1.5) (3.4)
Share-based payments 2 (0.9) (0.6) (0.7)
Loss on disposal of
non core-business 2 - - (0.8)
--------------------------------- ----- -------------- -------------- ----------
Total administrative
expenses (34.7) (34.6) (74.0)
Operating profit 1.3 0.9 2.1
Finance costs (0.7) (0.6) (1.6)
Profit before tax 0.6 0.3 0.5
Income tax charge 3 (0.1) (0.4) (0.9)
0.5 (0.1) (0.4)
Profit/(loss) and total
comprehensive income
for the period from
continuing operations
Profit/(loss) attributable
to owners of the parent 0.5 (0.1) (0.4)
================================= ===== ============== ============== ==========
Earnings per share attributable
to owners of the parent
(pence)
Total
- Basic 4 0.8p - (0.8)p
- Diluted 4 0.8p - (0.8)p
*See Note 1 for details of a prior period presentational
restatement
Consolidated Statement of Changes
in Equity
For the six months ended 30
September 2020
Share Share Other Retained Total
capital premium reserves earnings equity
GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 1 April 2019 20.4 54.9 0.9 1.3 77.5
Profit for the period - - - (0.1) (0.1)
Total comprehensive income for
the period - - - (0.1) (0.1)
------------------------------------ ----------- --------- ---------- ---------- -----------
Transaction with owners
Issue of share capital 2.5 17.7 (0.2) - 20.0
Issue costs - (0.7) - - (0.7)
Share-based payments charge - - 0.2 - 0.2
2.5 17.0 - - 19.5
------------------------------------ ----------- --------- ---------- ---------- -----------
Balance at 30 September 2019
(unaudited) 22.9 71.9 0.9 1.2 96.9
==================================== =========== ========= ========== ========== ===========
Balance at 1 October 2019 22.9 71.9 0.9 1.2 96.9
Profit for the period - - - (0.3) (0.3)
Total comprehensive income for
the period - - - (0.3) (0.3)
------------------------------------ ----------- --------- ---------- ---------- -----------
Transaction with owners
Share-based payments charge - - 0.1 - 0.1
- - 0.1 - 0.1
------------------------------------ ----------- --------- ---------- ---------- -----------
Balance at 31 March 2020 (audited) 22.9 71.9 1.0 0.9 96.7
==================================== =========== ========= ========== ========== ===========
Balance at 1 April 2020 22.9 71.9 1.0 0.9 96.7
Profit for the period - - - 0.5 0.5
Total comprehensive income for
the period - - - 0.5 0.5
------------------------------------ ----------- --------- ---------- ---------- -----------
Transaction with owners
Issue of share capital 4.5 37.7 (0.1) - 42.1
Issue costs - (1.3) - - (1.3)
Share-based payments charge - - 0.2 - 0.2
4.5 36.4 0.1 - 41.0
------------------------------------ ----------- --------- ---------- ---------- -----------
Balance at 30 September 2020
(unaudited) 27.4 108.3 1.1 1.4 138.2
==================================== =========== ========= ========== ========== ===========
Consolidated Statement of
Financial Position
At 30 September 2020
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020*
Note GBP'm GBP'm GBP'm
ASSETS
Non-current assets
Intangible assets 6 146.0 108.3 124.6
Trade and other receivables 3.9 - 3.9
Property, plant and
equipment 6.8 6.8 5.9
Right of use assets 15.5 12.3 14.3
Deferred tax asset 0.6 0.2 0.6
172.8 127.6 149.3
----------------------------- ----- -------------- -------------- ----------
Current assets
Inventories 4.2 4.7 4.1
Trade and other receivables 7 53.0 49.0 48.2
Held for sale property 1.3 - 1.3
Other financial assets - 0.2 -
Cash and cash equivalents 9.4 6.4 7.2
67.9 60.3 60.8
----------------------------- ----- -------------- -------------- ----------
Total assets 240.7 187.9 210.1
----------------------------- ----- -------------- -------------- ----------
LIABILITIES
Current liabilities
Trade and other payables (60.6) (40.7) (45.1)
Financial liabilities
- lease liabilities (5.5) (5.4) (5.6)
Current tax liabilities (0.7) (1.5) -
Provisions (0.7) (1.0) (0.4)
(67.5) (48.6) (51.1)
----------------------------- ----- -------------- -------------- ----------
Non-current liabilities
Trade and other payables (7.6) (5.0) (8.6)
Financial liabilities
- borrowings 9 (10.0) (24.8) (38.5)
Financial liabilities
- lease liabilities (11.1) (8.2) (9.7)
Deferred tax liabilities (6.3) (4.4) (5.5)
(35.0) (42.4) (62.3)
----------------------------- ----- -------------- -------------- ----------
Total liabilities (102.5) (91.0) (113.4)
Net assets 138.2 96.9 96.7
============================= ===== ============== ============== ==========
Equity
Share capital 10 27.4 22.9 22.9
Share premium account 108.3 71.9 71.9
Other reserves 1.1 0.9 1.0
Retained earnings 1.4 1.2 0.9
Equity attributable
to owners of parent 138.2 96.9 96.7
============================= ===== ============== ============== ==========
*See Note 1 for details of a prior period presentational
restatement
Consolidated Statement
of Cash Flows
For the six months ended 30
September 2020
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 September 30 September 31 March
2020 2019 2020
Note GBP'm GBP'm GBP'm
Cash flows from operating
activities
Net cash generated from
operations 12 20.3 3.7 14.2
Net finance costs (0.5) (0.4) (0.8)
Income taxes paid (1.0) (0.1) (2.2)
-------------------------------- ----- -------------- -------------- ------------
Net cash generated from
operating activities before
acquisition and restructuring
costs 18.8 3.2 11.2
Acquisition and restructuring
costs (3.0) (3.8) (7.8)
Net cash used in operating
activities 15.8 (0.6) 3.4
--------------------------------------- -------------- -------------- ------------
Cash flows from investing
activities
Purchases of property,
plant and equipment 2 (2.0) (1.1) (2.9)
Disposal of property,
plant and equipment 0.1 0.1 0.2
Purchase of subsidiary
undertakings net of cash
acquired (18.4) (8.3) (20.6)
Disposal of non-core business - - 1.5
Net cash flows used in investing
activities (20.3) (9.3) (21.8)
--------------------------------------- -------------- -------------- ------------
Cash flows from financing
activities
Proceeds from share issues 10 40.0 20.0 20.0
Cost of share issues 10 (1.3) (0.7) (0.7)
Repayment of bank borrowings (38.5) (14.0) (9.4)
Repayment of debt upon
purchase of subsidiary
undertaking (0.3) - (7.7)
New bank loans raised 10.0 6.0 21.2
Finance lease repayments (3.2) (2.7) (6.0)
Other financing activities - - 0.5
Net cash generated in financing
activities 6.7 8.6 17.9
--------------------------------------- -------------- -------------- ------------
Net increase/(decrease) in
cash and cash equivalents 2.2 (1.3) (0.5)
Cash and cash equivalents
at start of period 7.2 7.7 7.7
Cash and cash equivalents
at the end of period 9.4 6.4 7.2
--------------------------------------- -------------- -------------- ------------
Cash and cash equivalents shown
above comprise:
Cash at bank 9.4 6.4 7.2
-------------------------------- ----- -------------- -------------- ------------
Notes to the Consolidated Interim Report
For the six months ended 30 September 2020
1 Basis of preparation
Basis of preparation
The consolidated interim financial information of the Group for
the six months ended 30 September 2020 was approved by the Board of
Directors and authorised for issue on 3 December 2020. The
disclosed figures are not statutory accounts in terms of Section
434 of the Companies Act 2006. Statutory accounts for the year
ended 31 March 2020, on which the auditors gave an audit report
which was unqualified and did not contain a statement under section
498(2) or (3) of the Companies Act 2006, have been filed with the
Registrar of Companies. The annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union.
The comparative figures for the financial year ended 31 March
2020 and the six months ended 30 September 2019 are consistent with
the Group's annual financial statements and interim financial
statements respectively.
Going concern
Based on the Group's cash flow forecasts and projections, the
Directors are satisfied that the Group has adequate resources to
continue in operational existence for the foreseeable future. While
the Group has seen some disruption from COVID-19, the impact has
been manageable and, given the regulations that govern the
requirement for its essential services, the business model has
demonstrated resilience. In the event of further disruption to the
business in the future as a result of COVID-19 the Directors are
confident additional cost reduction and cash preservation measures
could be utilised in conjunction with the Group's existing debt
facility to reduce costs and preserve cash. They continue to adopt
the going concern basis of accounting in preparing these interim
financial statements.
Accounting policies
This interim report has been prepared on a basis consistent with
the accounting policies expected to be applied for the year ending
31 March 2021.
There were no new relevant Standards or Interpretations to be
adopted for the six months ended 30 September 2020.
All other accounting policies and methods of computation applied
are consistent with those applied for the year ended 31 March
2020.
Critical accounting estimates and judgements continue to be
applied to the identification of separable intangibles on
acquisition and rate of customer attrition, acquisition and other
costs, valuation of separable intangibles on acquisition,
impairment of non-financial assets, impairment of trade receivables
and recoverability of amounts due from contract assets.
Retrospective adjustment of comparative statement of financial
position
An additional GBP1.4m of goodwill has been recognised in the
statement of financial position as at 31 March 2020 as further
assessments have been made to the provisional fair values of
acquisitions made in the prior year, of which GBP1.3m relates to a
revaluation of contingent consideration payable in respect of the
acquisition of Law At Work following a reassessment of performance
targets.
Re-presentation of comparative consolidated statement of
comprehensive income
The consolidated statement
of comprehensive income
for the six months ended
30 September 2019 has been
re-presented to take into
account inter-segment eliminations.
The following adjustments
have been made:
Unaudited Unaudited
six months six months
ended 30 September ended 30 September
2019 (Restated) 2019 (Original) Difference
GBP'm GBP'm GBP'm
Revenue 87.4 89.3 (1.9)
Cost of sales (51.9) (54.5) 2.6
Administrative costs (28.7) (28.0) (0.7)
--------------------------------------- -------------------- -------------------- -----------
Total 6.8 6.8 -
2 Segmental information
The Group is organised into two main operating segments, Risk
Management & Compliance ("Risk & Compliance") and Water
Treatment & Air Quality ("Water & Air"). Services per
segment operate as described in the Chief Executive's review. The
key profit measures are adjusted operating profit and adjusted
EBITDA and are shown before acquisition and restructuring costs,
amortisation of acquisition intangibles, share-based payments and
profit on disposal of non-core businesses. 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 operating 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 computer software, property,
plant and equipment and includes additions resulting from
acquisitions through business combinations. Segment assets and
liabilities are allocated between segments on an actual basis.
REVENUE
The revenue from external customers was derived from the Group's
principal activities primarily in the UK (where the Company is
domiciled) as follows:
Six months ended 30 September
2020
Unaudited
Water Head
Risk & Compliance & Air Office Total
GBP'm GBP'm GBP'm GBP'm
Revenue 40.9 45.4 - 86.3
Inter-segment elimination (1.1) (1.9) - (3.0)
---------------------------------- ------------------ ------- -------- ------
Revenue from external customers 39.8 43.5 - 83.3
---------------------------------- ------------------ ------- -------- ------
Segment adjusted operating
profit/(loss) 4.4 3.9 (0.9) 7.4
---------------------------------- ------------------ ------- -------- ------
Acquisition costs (0.6)
Restructuring costs (2.4)
Amortisation of acquisition
intangibles (2.2)
Share-based payments (0.9)
Operating profit 1.3
Finance costs (0.7)
Profit before tax 0.6
Tax charge (0.1)
Profit after tax 0.5
---------------------------------- ------------------ ------- -------- ------
Segment assets 39.0 43.8 158.0 240.8
Segment liabilities 31.3 34.3 37.0 102.6
Capital expenditure 1.3 0.6 0.1 2.0
Depreciation and amortisation 1.6 2.4 2.3 6.3
---------------------------------- ------------------ ------- -------- ------
Six months ended 30 September
2019
Unaudited
Water Head
Risk & Compliance & Air Office Total
GBP'm GBP'm GBP'm GBP'm
Revenue 42.8 46.5 - 89.3
Inter-segment elimination (0.6) (1.3) - (1.9)
---------------------------------- ------------------ ------- -------- ------
Revenue from external customers 42.2 45.2 - 87.4
---------------------------------- ------------------ ------- -------- ------
Segment adjusted operating
profit/(loss) 4.3 3.4 (0.9) 6.8
---------------------------------- ------------------ ------- -------- ------
Acquisition costs (0.6)
Restructuring costs (3.2)
Amortisation of acquisition
intangibles (1.5)
Share-based payments (0.6)
Operating profit 0.9
Finance costs (0.6)
Profit before tax 0.3
Tax charge (0.4)
L oss after tax (0.1)
---------------------------------- ------------------ ------- -------- ------
Segment assets 33.1 42.9 111.9 187.9
Segment liabilities 19.6 28.7 42.7 91.0
Capital expenditure 0.4 0.7 - 1.1
Depreciation and amortisation 1.1 2.0 1.5 4.6
---------------------------------- ------------------ ------- -------- ------
Year ended 31 March 2020
Audited
Water Head
Risk & Compliance & Air Office Total
GBP'm GBP'm GBP'm GBP'm
Revenue 81.6 108.6 - 190.2
Inter-segment elimination (1.4) (3.4) - (4.8)
---------------------------------- ------------------ ------- -------- ------
Revenue from external customers 80.2 105.2 - 185.4
---------------------------------- ------------------ ------- -------- ------
Segment adjusted operating
profit/(loss) 8.1 8.9 (2.2) 14.8
---------------------------------- ------------------ ------- -------- ------
Acquisition costs (1.1)
Restructuring costs (6.7)
Amortisation of acquisition
intangibles (3.4)
Share-based payments (0.7)
Loss on disposal of non-core
business (0.8)
Operating profit 2.1
Finance costs (1.6)
Profit before tax 0.5
Tax charge (0.9)
L oss after tax (0.4)
---------------------------------- ------------------ ------- -------- ------
Segment assets 38.8 34.2 135.7 208.7
Segment liabilities 25.6 25.3 61.1 112.0
Capital expenditure 0.9 2.0 - 2.9
Depreciation and amortisation 2.5 4.8 3.4 10.7
---------------------------------- ------------------ ------- -------- ------
Reconciliation of segment adjusted operating profit to adjusted
EBITDA
Unaudited
six months
ended
Risk & Water Head 30 September
Compliance & Air Office 2020 Total
GBP'm GBP'm GBP'm GBP'm
Segment adjusted operating
profit/(loss) 4.4 3.9 (0.9) 7.4
Depreciation 1.6 2.4 0.1 4.1
----------------------------- ------------ ------- -------- --------------
Adjusted EBITDA 6.0 6.3 (0.8) 11.5
----------------------------- ------------ ------- -------- --------------
Unaudited
six months
ended
Risk & Water Head 30 September
Compliance & Air Office 2019 Total
GBP'm GBP'm GBP'm GBP'm
Segment adjusted operating
profit/(loss) 4.3 3.4 (0.9) 6.8
Depreciation 1.1 2.0 - 3.1
----------------------------- ------------ ------- -------- --------------
Adjusted EBITDA 5.4 5.4 (0.9) 9.9
----------------------------- ------------ ------- -------- --------------
Audited
Risk & Water Head year ended
Compliance & Air Office 2020 Total
GBP'm GBP'm GBP'm GBP'm
Segment adjusted operating
profit/(loss) 8.1 8.9 (2.2) 14.8
Depreciation 2.5 4.8 - 7.3
----------------------------- ------------ ------- -------- --------------
Adjusted EBITDA 10.6 13.7 (2.2) 22.1
----------------------------- ------------ ------- -------- --------------
The above tables reconcile segment adjusted operating
profit/(loss), which excludes separately disclosed acquisition and
other costs, to the standard profit measure under International
Financial Reporting Standards (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
comparable with other companies' adjusted operating profit
measures. It is not intended to be a substitute, or superior to,
IFRS measurements of profit.
3 Tax
The underlying tax charge is based on the expected effective tax
rate (19%) for the year ending 31 March 2021 applied to taxable
trading profits for the period.
4 Earnings per ordinary share
Basic earnings per share have been calculated on the profit
after tax for the period and the weighted average number of
ordinary shares in issue during the period.
Unaudited Unaudited Audited
six months six months year
ended 30 ended 30 ended
September September 31 March
2020 2019 2020
Weighted average number of
shares in issue 50,096,407 44,231,851 45,059,959
Total profit/(loss) after
tax for the period GBP0.5m GBP(0.1)m GBP(0.4)m
-------------------------------- ------------ ------------ -----------
Total basic earnings per
ordinary share (pence) 0.8p - (0.8)p
-------------------------------- ------------ ------------ -----------
Weighted average number of
shares in issue 50,096,407 44,231,851 45,059,959
Executive incentive plan 1,869,509 1,651,450 1,437,476
Weighted average fully diluted
number of shares in issue 51.965.916 45,883,301 46,497,435
Total fully diluted earnings
per share (pence) 0.8p - (0.8)p
-------------------------------- ------------ ------------ -----------
The Directors believe that adjusted basic earnings per share
provide a more appropriate representation of the underlying
earnings derived from the Group's business. The adjusted items are
shown in the table below:
Unaudited Unaudited
six months six months
ended 30 ended 30 Audited year
September September ended 31
2020 2019 March 2020
GBP'm GBP'm GBP'm
Profit before tax for the
period 0.6 0.3 0.5
Adjustments:
Acquisition costs 0.6 0.6 1.1
Restructuring costs 2.4 3.2 6.7
Amortisation of acquisition
intangibles 2.2 1.5 3.4
Share-based payments 0.9 0.6 0.7
Loss on disposal of non-core
business - - 0.8
Adjusted profit before tax
for the period 6.7 6.2 13.2
------------------------------ ------------ ------------ -------------
The adjusted earnings per share, based on weighted average
number of shares in issue during the period, is calculated
below:
Unaudited Unaudited
six months six months
ended 30 ended 30 Audited year
September September ended 31
2020 2019 March 2020
Adjusted profit before tax
(GBP'm) 6.7 6.2 13.2
Tax at 19% (1.2) (1.2) (2.5)
------------ ------------ -------------
Adjusted profit after taxation
(GBP'm) 5.5 5.0 10.7
------------ ------------
Adjusted basic earnings per
share (pence) 10.7 11.3 23.6
--------------------------------- ------------ ------------ -------------
Adjusted fully diluted earnings
per share (pence) 10.3 10.9 22.9
--------------------------------- ------------ ------------ -------------
5 Dividends
The Company has not declared any dividends in respect of the
current or prior period.
6 Intangible assets
Customer Applications
Goodwill relationships software Total
GBP'm GBP'm GBP'm GBP'm
Cost
1 April 2019 70.2 19.8 2.8 92.8
Acquired with subsidiary 12.6 7.3 0.1 20.0
Additions - - 0.2 0.2
30 September 2019 82.8 27.1 3.1 113.0
-------------------------- --------- --------------- ------------- ------
1 October 2019 82.8 27.1 3.1 113.0
Acquired with subsidiary 15.6 4.7 - 20.3
Additions - - 0.3 0.3
Disposals (2.4) - - (2.4)
31 March 2020 96.0 31.8 3.4 131.2
-------------------------- --------- --------------- ------------- ------
1 April 2020 96.0 31.8 3.4 131.2
Acquired with subsidiary 16.5 5.2 1.6 23.3
Additions - - 0.4 0.4
30 September 2020 112.5 37.0 5.4 144.9
-------------------------- --------- --------------- ------------- ------
Accumulated amortisation
and
impairment
1 April 2019 - 3.1 0.1 3.2
Charge for the period - 1.4 0.1 1.5
30 September 2019 - 4.5 0.2 4.7
-------------------------- --------- --------------- ------------- ------
1 October 2019 - 4.5 0.2 4.7
Charge for the period - 1.8 0.1 1.9
Disposals - - - -
31 March 2020 - 6.3 0.3 6.6
-------------------------- --------- --------------- ------------- ------
1 April 2020 - 6.3 0.3 6.6
Charge for the period - 2.1 0.2 2.3
30 September 2020 - 8.4 0.5 8.9
-------------------------- --------- --------------- ------------- ------
Carrying amount
30 September 2019 -
Unaudited 82.8 22.6 2.9 108.3
31 March 2020 - Audited 96.0 25.5 3.1 124.6
-------------------------- --------- --------------- ------------- ------
30 September 2020 -
Unaudited 112.5 28.6 4.9 146.0
-------------------------- --------- --------------- ------------- ------
An additional GBP1.4m of goodwill has been recognised in the
statement of financial position as at 31 March 2020 as further
assessments have been made to the provisional fair values of
acquisitions made in the prior year, of which GBP1.3m relates to a
revaluation of contingent consideration payable in respect of the
acquisition of Law At Work following a reassessment of performance
targets.
7 Trade and Other Receivables
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP'm GBP'm GBP'm
Trade receivables 37.7 36.1 35.8
Less: provision for impairment
of trade receivables (1.8) (1.4) (1.7)
----------------------------------- -------------- -------------- ----------
Trade receivables - net 35.9 34.7 34.1
Other receivables 0.8 1.0 1.1
Amounts due from contract
assets 6.3 9.4 5.4
Prepayments 5.0 3.9 2.4
Deferred consideration receivable
in less than one year 5.0 - 5.2
----------------------------------- -------------- -------------- ----------
53.0 49.0 48.2
----------------------------------- -------------- -------------- ----------
Non current
Deferred consideration receivable
in more than one year 3.9 - 3.9
----------------------------------- -------------- -------------- ----------
3.9 - 3.9
----------------------------------- -------------- -------------- ----------
Trade receivables are provided for based on estimated
irrecoverable amounts, determined by reference to past payment
history and the current financial status of the customers.
As at 30 September 2020, trade and other receivables includes
amounts due from customer contracts of GBP6.3m (2019: GBP9.4m).
Revenue is recognised based on contracted terms with customers, in
accordance with a contract's stage of completion, with any variable
consideration estimated using the expected value method as
constrained if necessary. If a contract is in dispute, management
use their judgement based on evidence and external expert advice,
where appropriate, to estimate the value of accrued income
recoverable on the contract. Actual future outcome may differ from
the estimated value currently held in the financial statements. The
outcome of any amounts subject to dispute is not anticipated to
have a material impact on the financial statements.
8 Net debt
Analysis of net debt
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP'm GBP'm GBP'm
Cash and cash equivalents 9.4 6.4 7.2
Bank loans and overdrafts
due within one year - - -
Bank loans due after one year (10.0) (24.8) (38.5)
Finance leases due within
one year (5.5) (5.4) (5.6)
Finance leases due after one
year (11.1) (8.2) (9.7)
(17.2) (32.0) (46.6)
------------------------------- -------------- -------------- ----------
9 Financial liabilities - Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP'm GBP'm GBP'm
Current
Bank loans - secured - - -
- - -
---------------------- -------------- -------------- ----------
Non - current
Bank loans - secured 10.0 24.8 38.5
10.0 24.8 38.5
---------------------- -------------- -------------- ----------
The bank debt is due to HSBC UK Bank plc and National
Westminster Bank plc and is secured by a fixed and floating charge
over the assets of the Group. Under the terms of the finance
facility the Group is required to meet quarterly covenant tests in
respect of interest cover and leverage.
10 Called up share capital
The following shares were issued during the period:
No. of shares Share capital Share premium
'm GBP'm GBP'm
Balance at 1 April 2019 40.8 20.4 54.9
23 May 2019 - Subscription Shares 3.1 1.5 11.7
Directly attributable costs - - (0.4)
28 May 2019 - Marlowe 2016 Incentive
Scheme Conversion 0.4 0.2 -
11 June 2019 - Subscription Shares 1.6 0.8 5.9
Directly attributable costs - - (0.2)
Balance at 30 September 2019 45.9 22.9 71.9
30 March 2020 - Marlowe 2016 Incentive
Scheme Conversion - - -
Balance at 31 March 2020 45.9 22.9 71.9
15 April 2020 - Marlowe 2016 Incentive
Scheme Conversion 0.2 0.1 -
26 June 2020 - Subscription Shares 4.4 2.2 18.9
Directly attributable costs - - (0.7)
15 July 2020 - Subscription Shares 4.0 2.0 16.9
Directly attributable costs - - (0.6)
31 July 2020 - Employee Bonus
Shares - - 0.2
8 September 2020 - Consideration
Shares ("William Martin" 0.4 0.2 1.7
------------------------------------------ -------------- -------------- --------------
Balance at 30 September 2020 54.9 27.4 108.3
========================================== ============== ============== ==============
11 Business combinations
Acquisition of Deminos Consulting Limited
On 28 May 2020, the Group acquired Deminos Consulting Limited
("Deminos"), a provider of subscription-based HR and employment law
services, for a total consideration of GBP0.6m, satisfied by the
payment of GBP0.4m in cash on completion, and GBP0.2m in cash
payable subject to the achievement of certain performance targets
by the acquired business 12 months post acquisition. Since the
acquisition date is less than 12 months prior to the Group's
accounts being signed off, the acquisition balance sheet is still
subject to finalisation. The provisional fair values are as
follows:
Provisional fair value at acquisition GBP'm
---------------------------------------------- ------
Intangible assets - customer relationships 0.3
Right of use assets 0.1
Trade and other receivables 0.1
Trade and other payables (0.2)
Lease liabilities (0.1)
Tax liabilities (0.1)
Net liabilities acquired 0.1
---------------------------------------------- ------
Goodwill 0.5
---------------------------------------------- ------
One hundred percent of the equity of Deminos was acquired in
this transaction. Acquisition costs of GBP33k have been charged to
profit or loss.
Acquisition of Elogbooks Facilities Management Limited,
Elogbooks Facilities Services Limited and 4D Monitoring Limited
On 30 June 2020, the Group acquired Elogbooks Facilities
Management Limited, Elogbooks Facilities Services Limited and 4D
Monitoring Limited (together with their subsidiaries, "Elogbooks"),
a provider of contractor management software and services, for a
total consideration of GBP17.6m, satisfied by the payment of
GBP10.4m in cash on completion, GBP3.9m in cash payable subject to
the achievement of certain performance targets by the acquired
business 12 and 24 months post acquisition and GBP3.3m satisfied by
the issuance of a put and call option. Since the acquisition date
is less than 12 months prior to the Group's accounts being signed
off, the acquisition balance sheet is still subject to
finalisation. The provisional fair values are as follows:
Provisional fair value at acquisition GBP'm
-------------------------------------------- ------
Trade and other receivables 3.4
Intangible assets - customer relationships 2.9
Cash 2.3
Intangible assets - software 1.6
Right of use assets 0.7
Trade and other payables (3.5)
Deferred tax liabilities (0.9)
Lease liabilities (0.7)
Tax liabilities (0.1)
Net assets acquired 5.7
-------------------------------------------- ------
Goodwill 11.9
-------------------------------------------- ------
One hundred percent of the equity of Elogbooks Facilities
Management, 90 percent of the equity of Elogbooks Facilities
Services Limited and 49 percent of the equity of 4D Monitoring
Limited was acquired in this transaction. Acquisition costs of
GBP440k have been charged to profit or loss.
Acquisition of Caritas Group Limited
On 28 July 2020, the Group acquired Caritas Group Limited
("Caritas"), a provider of occupational health services, for a
total consideration of GBP0.3m, satisfied by the payment of GBP0.2m
in cash on completion and GBP0.1m in cash payable subject to the
achievement of certain performance targets by the acquired business
12 months post acquisition. Since the acquisition date is less than
12 months prior to the Group's accounts being signed off, the
acquisition balance sheet is still subject to finalisation. The
provisional fair values are as follows:
Provisional fair value at acquisition GBP'm
-------------------------------------------- ------
Cash 0.2
Intangible assets - customer relationships 0.1
Net assets acquired 0.3
-------------------------------------------- ------
Goodwill -
-------------------------------------------- ------
One hundred percent of the equity of Caritas was acquired in
this transaction. Acquisition costs of GBP11k have been charged to
profit or loss.
Acquisition of Rainbow Water Services Limited
On 30 July 2020, the Group acquired Rainbow Water Services
Limited ("Rainbow Water"), a provider of water treatment and
hygiene services, for a total consideration of GBP0.7m, satisfied
by the payment of GBP0.6m in cash on completion and GBP0.1m in cash
payable subject to the achievement of certain performance targets
by the acquired business 12 months post acquisition. Since the
acquisition date is less than 12 months prior to the Group's
accounts being signed off, the acquisition balance sheet is still
subject to finalisation. The provisional fair values are as
follows:
Provisional fair value at acquisition GBP'm
-------------------------------------------- ------
Cash 0.4
Intangible assets - customer relationships 0.1
Trade and other receivables 0.1
Property, plant and equipment 0.1
Trade and other payables (0.1)
Net assets acquired 0.6
-------------------------------------------- ------
Goodwill 0.1
-------------------------------------------- ------
One hundred percent of the equity of Rainbow Water was acquired
in this transaction. Acquisition costs of GBP26k have been charged
to profit or loss.
Acquisition of Morgan Fire Protection Limited
On 24 September 2020, the Group acquired Morgan Fire Protection
Limited ("Morgan Fire"), a provider of fire safety services, for a
total consideration of GBP6.4m, satisfied by the payment of GBP6.4m
in cash on completion. Since the acquisition date is less than 12
months prior to the Group's accounts being signed off, the
acquisition balance sheet is still subject to finalisation. The
provisional fair values are as follows:
Provisional fair value at acquisition GBP'm
---------------------------------------------- ------
Intangible assets - customer relationships 1.6
Trade and other receivables 1.0
Loan receivable 0.7
Cash 0.6
Right of use assets 0.5
Property, plant and equipment 0.3
Inventories 0.1
Trade and other payables (1.3)
Lease liabilities (0.5)
Deferred tax liabilities (0.4)
Tax liabilities (0.1)
Net assets acquired 2.5
---------------------------------------------- ------
Goodwill 3.9
---------------------------------------------- ------
One hundred percent of the equity of Morgan Fire was acquired in
this transaction. Acquisition costs of GBP86k have been charged to
profit or loss.
12 Cash inflow from operations
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP'm GBP'm GBP'm
Profit before tax 0.6 0.3 0.5
Depreciation of property, plant
and equipment 4.1 3.1 7.3
Amortisation of intangible assets 2.2 1.5 3.4
Net finance costs 0.7 0.6 1.6
Acquisition costs 0.6 0.6 1.1
Restructuring costs 2.4 3.2 6.7
Share-based payments 0.9 0.6 0.7
Loss on disposal of non-core
business - - 0.8
Decrease/(increase) in inventories - 0.1 (0.3)
Decrease/(increase) in trade
and other receivables 0.1 (2.9) (6.0)
Increase/(decrease) in trade
and other payables 8.7 (3.4) (1.6)
Net cash generated from operations 20.3 3.7 14.2
------------------------------------ -------------- -------------- ----------
13 Post balance sheet events
On 28 October 2020, the Group agreed the acquisition of Ellis
Whittam, a provider of outsourced Employment Law, HR and Health
& Safety services, for a total consideration of GBP59m (net of
cash acquired) satisfied by the payment of GBP59m in cash on
completion. The acquisition completed on 1 December following FCA
consent.
On 2 November 2020, the Group acquired Black & Banton
Occupational and Physical Health Limited, a provider of
occupational health services, for a total consideration (net of
cash acquired) of GBP1.5m, satisfied by the payment of GBP1.1m in
cash on completion and a contingent consideration of approximately
GBP0.4m subject to the achievement of certain performance targets
by the acquired business 12 months post acquisition.
On 19 November 2020, the Group signed a new, enlarged revolving
credit facility with HSBC UK Bank Plc and National Westminster Bank
Plc. The new facility replaces the Group's existing GBP45 million
facility and comprises a three-year, GBP70 million revolving credit
facility and an additional accordion facility of GBP20 million.
On 27 November 2020, the Group acquired Wrightway Health
Limited, a provider of occupational health services, for a total
consideration (net of cash acquired) expected to be in the region
of GBP4.5m, satisfied by the payment of GBP3.5m in cash on
completion and contingent consideration of approximately GBP1.0m
subject to the achievement of certain performance targets by the
acquired business 12 months post acquisition.
14 Related parties and key management compensation
Related parties
There were no related party transactions during the period.
Key management compensation
Transactions between the Group and key management personnel in
the period relate to remuneration consistent with the policy set
out in the Directors' Remuneration Report within the Group's 2020
Annual Report.
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END
IR EAPAAEDEEFFA
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December 03, 2020 02:00 ET (07:00 GMT)
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