Marlowe PLC on Monday said it expects to report a decline in earnings during its most recent financial year, and announced its acquisition of SludgeTek Ltd.
The London-based provider of software and services for safety and regulatory compliance said it expects to post revenue of around £305.0 million for its financial year that ended March 31, which would be 39% lower than £503.2 million the year before.
Adjusted earnings before interest, tax, depreciation and amortisation are anticipated at around £32.5 million, following £4.2 million in head office costs. This would be down 34% from £49.0 million.
Adjusted pretax profit is expected ahead of market expectations at around £18.5 million, against £46.8 million a year prior. Marlowe cited a company-compiled prior market consensus for £16 million in adjusted pretax profit.
Following the completion of its ongoing buyback for up to £75 million, for which £72 million to date has been returned to shareholders, Marlowe intends to launch a new additional buyback for up to £15 million.
The new programme will be undertaken on the same terms as the prior buyback, and will be funded by the company’s existing cash resources.
Marlowe also announced on Monday the acquisition of waste management and manufacturing services provider SludgeTek for an expected enterprise value of £6.2 million.
SludgeTek delivered revenue of £5.3 million and adjusted Ebitda of £2.7 million in its most recent financial year that ended September 30.
Marlowe will make an initial £5.3 million payment, followed by a deferred consideration of around £500,000 based on the completion of post-acquisition performance targets. It expects the business to be ‘easily integrated into the groups’ operations’ and does not anticipate any restructuring costs.
‘The acquisition further strengthens Marlowe’s position as a leading provider of wastewater rental solutions and is highly complementary to the group’s existing capabilities,’ said the company.
‘The group continues to actively assess further bolt-on acquisition opportunities across both Water & Air Hygiene and Fire Safety & Security, consistent with its strategy to build scale and consolidate market leadership in these attractive and resilient sectors.’
Shares in Marlowe were up 2.0% at 334.50 pence each in London on Monday afternoon. The stock is up 28% over the past year.
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