- Full-year sales to meet forecasts
- Profit seen above consensus
- £15 million extra share buyback
Investors in business services group Marlowe (MRL:AIM) seemed underwhelmed at the company’s full-year trading update and news of a further share buyback.
The shares, which last September jumped 100p or 42% to 340p on the spin-off of Optima Health (OPT:AIM), only managed a gain of 6p or 1.8% to 334p.
‘STRONG PROGRESS’
Ahead of its official results for the year to the end of March 2025, the firm said it had delivered ‘strong financial and strategic progress’, with revenue expected to be in the region of £305 million and EBITDA (earnings before interest, tax, depreciation and amortisation) in line with market expectations and adjusted pre-tax profit ahead of around £18.5 million against expectations of £16 million.
After demerging selected GRC (governance, risk and compliance) assets at the start of the 2024/25 financial year for an enterprise value of £430 million, the firm returned £150 million to shareholders via a special dividend last July and began a £75 million share buyback programme which it has now almost finished.
Following the demerger and listing of Optima Health, the group is now focused on TIC (testing, inspection and certification) with ‘market-leading’ businesses in water and air hygiene and fire safety and security.
BUYBACK UNDERWHELMS
The group also announced the acquisition of Andover-based specialist waste water treatment business Sludge Tek and an additional share buyback of up to £15 million.
Marlowe has agreed to pay £5.7 million up-front for Sludge Tek with another £0.5 million payment deferred according to the unit’s performance, which is a multiple of 3.6 times EBITDA based on its 2024 results.
The firm claimed Sludge Tek was ‘highly complementary’ to its existing operations and would be ‘easily integrated’ with no restructuring required, while it would continue to look for bolt-on acquisitions to build scale.
Meanwhile, the decision to extend the buyback by just £15 million seems to have left investors and analysts – most of whom have a Buy or Strong Buy recommendation – wanting more.
