Half Year Results

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				£83.3m	£77.8m*	7%
EBITDA1,2				£11.5m	£9.9m	16%
Operating profit2				£7.4m	£6.8m	8%
Profit before tax2				£6.7m	£6.2m	8%
Earnings per share - basic2				10.7p	11.3p	(5)%
Net debt3				£1.6m	£19.6m
*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				£83.3m	£87.4m
Operating profit				£1.3m	£0.9m
Profit before tax				£0.6m	£0.3m
Earnings per share - basic				0.8p	0.0p
Net debt				£17.2m	£32.0m

Financial Highlights

-  Resilient model : H1 revenue of £83.3 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 £225 million

-  Margin expansion : Adjusted EBITDA up 16% to £11.5 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 £40 million

-  Strong free cash flow : Net cash generated from operating activities, before acquisition and restructuring costs, of £18.8 million (H1 FY2020: £3.2 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 £1.6 million (2019: £19.6m)

-  Further placing, post-period end, to raise an additional £30 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 £70 million revolving credit facility and an additional accordion facility of 20 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 £225 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	[e-mail]
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 Ben Wright Yudith Karunaratna FTI Consulting	0203 207 7800 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 £225 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 £11.5 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 £7.4 million (H1 FY2020: £6.8 million), adjusted profit before tax increased 8% to £6.7 million (H1 FY2020: £6.2 million) and, following the oversubscribed placing to raise £40 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 £30 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 £225 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 £83.3 million (H1 FY2020: £87.4 million). Excluding the impact of the disposal of non-core activities in March 2020 that contributed revenue of £9.6 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 £11.5 million (H1 FY2020: £9.9 million) and adjusted operating profit was £7.4 million (H1 FY2020: £6.8 million). On a statutory basis, profit before tax from continuing operations was £0.6 million (H1 FY2020: £0.3 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:

Continuing operations	Profit Before Tax £'m	Operating profit £'m	EBITDA £'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 £138.2 million (31 March 2020: £96.7 million) reflecting the proceeds of the £40 million share placing in June and July 2020.

Net debt at 30 September 2020, including inter alia £15.6 million of lease liabilities as a result of the adoption of IFRS 16, was £17.2 million. Net debt at 30 September 2020, excluding IFRS 16 lease liabilities, was £1.6m (31 March 2020: £32.3 million). Following the period end, the Group entered into a new enlarged, three-year £70 million revolving credit facility with an additional accordion facility of £20 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 £18.8 million (H1 FY2020: £3.2 million). This includes a working capital inflow of £8.8 million (H1 FY2020: outflow £6.2 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 six months ended 30 September 2020		Unaudited six months ended 30 September 2019*		Audited year ended 31 March 2020
	Note		£'m		£'m		£'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)
Profit/(loss) and total comprehensive income for the period from continuing operations			0.5		(0.1)		(0.4)
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 capital		Share premium	Other reserves	Retained earnings	Total  equity
	£'m		£'m	£'m	£'m	£'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 30 September 2020		Unaudited 30 September 2019		Audited  31 March 2020*
	Note		£'m		£'m		£'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 six months ended 30 September 2020		Unaudited six months ended 30 September 2019		Audited  year  ended 31 March  2020
	Note		£'m		£'m		£'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 £1.4m 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 £1.3m 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 six months ended 30 September 2019 (Restated)				Difference
				Unaudited six months ended 30 September 2019 (Original)
		£'m		£'m		£'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		Risk & Compliance				Head Office
				Water & Air				Total
		£'m		£'m		£'m		£'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		Risk & Compliance				Head Office
				Water & Air				Total
		£'m		£'m		£'m		£'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
		Risk & Compliance		Water & Air		Head Office		Total
		£'m		£'m		£'m		£'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

		Risk & Compliance		Water & Air		Head Office		Unaudited six months ended 30 September 2020 Total
		£'m		£'m		£'m		£'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

		Risk & Compliance		Water & Air		Head Office		Unaudited six months ended 30 September 2019 Total
		£'m		£'m		£'m		£'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
		Risk & Compliance		Water & Air		Head Office		Audited year ended 2020 Total
		£'m		£'m		£'m		£'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 six months ended 30 September 2020	Unaudited six months ended 30 September 2019	Audited year ended 31 March 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	£0.5m	£(0.1)m	£(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 six months ended 30 September 2020	Unaudited six months ended 30 September 2019	Audited year ended 31 March 2020
	£'m	£'m	£'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 six months ended 30 September 2020	Unaudited six months ended 30 September 2019	Audited year ended 31 March 2020
Adjusted profit before tax (£'m)	6.7	6.2	13.2
Tax at 19%	(1.2)	(1.2)	(2.5)
Adjusted profit after taxation (£'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 relationships	Applications software
	Goodwill			Total
	£'m	£'m	£'m	£'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 £1.4m 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 £1.3m 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 30 September 2020	Unaudited 30 September 2019	Audited 31 March 2020
	£'m	£'m	£'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 £6.3m (2019: £9.4m). 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 30 September 2020	Unaudited 30 September 2019	Audited 31 March 2020
	£'m	£'m	£'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 30 September 2020	Unaudited 30 September 2019	Audited 31 March 2020
	£'m	£'m	£'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	£'m	£'m
Balance at 1 April 2019 23 May 2019 - Subscription Shares	40.8 3.1	20.4 1.5	54.9 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 £0.6m, satisfied by the payment of £0.4m in cash on completion, and £0.2m 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	£'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 £33k 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 £17.6m, satisfied by the payment of £10.4m in cash on completion, £3.9m in cash payable subject to the achievement of certain performance targets by the acquired business 12 and 24 months post acquisition and £3.3m 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	£'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 £440k 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 £0.3m, satisfied by the payment of £0.2m in cash on completion and £0.1m 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	£'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 £11k 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 £0.7m, satisfied by the payment of £0.6m in cash on completion and £0.1m 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	£'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 £26k 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 £6.4m, satisfied by the payment of £6.4m 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	£'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 £86k have been charged to profit or loss.

12  Cash inflow from operations

	Unaudited six months ended 30 September 2020		Unaudited six months ended 30 September 2019			Audited year ended 31 March 2020
	£'m		£'m			£'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 £59m (net of cash acquired) satisfied by the payment of £59m 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 £1.5m, satisfied by the payment of £1.1m in cash on completion and a contingent consideration of approximately £0.4m 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 £45 million facility and comprises a three-year, £70 million revolving credit facility and an additional accordion facility of £20 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 £4.5m, satisfied by the payment of £3.5m in cash on completion and contingent consideration of approximately £1.0m 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.

 

END

 

 

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