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Marlowe has a clearly defined growth strategy in the provision of business critical services, through a combination of organic and acquisition-led growth.
This growth is underpinned by our market’s defensive & resilient qualities. Our services are deemed non-discretionary by our customers.
Operating in highly attractive and resilient markets
We operate in specialist, regulated markets providing services that are largely non-discretionary for our customers and, therefore, largely insulated from the economic cycle. Each of our markets have structural growth characteristics and benefit from onerous and evolving regulations with increasing enforcement action from regulators. Compliance budgets continue to grow at attractive rates from the increasing focus on ESG and compliance of health & safety of staff. The risks and cost of not being compliant can be huge with fines reaching over £1 million in the most severe cases and therefore significantly outweigh the cost of implementation.
Strong cash generation and capital allocation policy
Our operations are capital light at around 1% of revenues and we have a modest working capital outflow relating to organic growth leading to strong cash generation. We then plan to redeploy this into further bolt-on acquisitions and opportunistic share repurchases. As at 31 March 2024, the Group expects all integration investment to have ceased by 30 September 2024 with an estimated cost of £5 million.
Long customer relationships
The Group benefits from long customer relationships lasting over 10 years on average which attest to our best-in-class compliance rates and service. Additionally, our services are usually delivered on multi-year contracts, often 3 to 5 years, which provides predictable revenue streams, with c75% of our revenues being recurring in nature. We provide our services to over 27,000 customers across a huge range of sectors with no one customer accounting for more than 4% of revenues.
Market leading businesses
We are the market leader in Water & Air Hygiene and a top 3 player in Fire Safety & Security. We are one of only a small number of payers to have built out both a national presence and a comprehensive suite of capabilities which allows us to outcompete and tender for contracts that a vast majority of regional players can’t fulfil. Additionally, we are finding our clients often consolidate their supplier base in favour of partners who, like them, possess scale, breadth of capability and enhanced standards of service.
Delivering shareholder returns through M&A
The markets we occupy are fragmented and yet we occupy no more than 5% in any single one. We have a proven track record of delivering returns having showcased this with the recently divested a number of GRC software and service assets for £430 million.
We have an extensive pipeline of bolt-on acquisition and have the inhouse capabilities to execute and subsequently integrate acquisition into one of our two key business lines. Acquisition remains an attractive route to delivery shareholder value.
Investment in technology and operational systems
We have invested in our technology and operating system which has resulted in a more efficient delivery of service. This allows our engineers in TIC to benefit from the route and service density we have built, allowing us to service more clients per day and significantly reduce return trips.
Our Markets
The markets we occupy are highly fragmented. Our current revenues indicate we serve on average c.5% of our estimated total addressable UK markets of £7.8 billion, yet we are a top three player in both of the compliance segments we service.
We have over 27,000 customers spanning more than 50 different sectors, ranging from large multinational companies to SMEs, as well as government and public sector organisations. Within this, no single customer contributes more than three percent of Marlowe’s total revenue.