Marlowe : Full Year Results FY2022

Commercial in confidence

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 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

28 June 2022

Marlowe plc

Preliminary unaudited results for the year ended 31 March 2022

Further strategic progress and strong start to the new financial year

Marlowe plc ("Marlowe", the "Group" or the "Company"), the UK leader in business-critical services and software which assure safety and regulatory compliance, announces its unaudited results for the year ended 31 March 2022 ("FY22").

Marlowe is holding a full year results presentation for investors and analysts at 09:30 GMT today. A link to this event is here.

1. Earnings before interest, taxes, depreciation and amortisation ("EBITDA")
2. Explanation of non-IFRS measures are contained within the Chief Finance Officer's review
3. Divisional EBITDA margin does not include central costs
4. Excluding IFRS 16 lease liabilities

Commercial in confidence

Marlowe plc 2022 I Results 2

Financial highlights

Strong performance as we continue to execute our compliance strategy

• Group revenue increased 65% to £315.9 million
• • Current annualised run-rate revenue £434 million with >85% recurring
• Adjusted EBITDA increased 90% to £54.4 million
• • Current annualised run-rate adjusted EBITDA £77 million
• Adjusted profit before tax increased 123% to £38.1 million
• Adjusted basic EPS increased 51% to 37.7p

Strong organic growth

• Underlying organic revenue growth of 9%, adjusted down from 11% to account for COVID-19 impact, representing an acceleration on prior years

Increasing software subscription revenues

• Software Annual Recurring Revenue ("SaaS ARR"): c.£38 million; 9% of total revenue
• Software generates approximately 25% of Group annualised run-rate adjusted EBITDA

Margin expansion

• Divisional adjusted EBITDA margin increased 250bps to 18.7% as we continue to benefit from integration synergies, operational & technological improvements and attractive operational gearing

Strong balance sheet and operating cash flow:

• Net debt/EBITDA leverage ratio 1.6x at year-end; 1.8x following FY23 Q1 acquisitions
• Net cash generated from operations £34.0 million

Strategic and Operational highlights

Medium-term growth strategy

• Expect to exceed run-rate targets of c.£500 million revenue and c.£100 million adjusted EBITDA with 90%+ cash conversion materially ahead of our original end of FY24 target

Successful execution of acquisitions and integrations

• £314m capital deployed in FY22 over 20 earnings enhancing acquisitions including:

1. £135 million acquisition of Optima Health, transforming the scale of our occupational health

consultancy within our GRC division

1. £113 million on broadening our software capabilities

• 1. £30 million on Hydro-X, building further scale in TIC division
• Integrations on-track and acquisitions trading in-line with, or significantly ahead of, pre-acquisition expectations

Broadening our software capabilities

• Major progress towards being the UK leader in compliance software, with SaaS ARR increasing from <2% in FY20 to 9% in FY22
• £70 million capital allocated to strengthen compliance eLearning offering via VinciWorks, Essential Skillz, SkillBoosters and Cylix acquisitions
• £32 million acquisition of Barbour, the UK's leading environmental, health & safety intelligence platform
• £11 million acquisition of CoreStream, the leading governance, risk and compliance SaaS platform to target enterprise level clients

Organic investment in product launches

• Launch of ProSure 360 software now contributing to revenue, and roll-out of YouManage and Meridian software across GRC client base
• Recent launch of ESG software to support clients' management of ESG strategies, following organic investment in OmniTrack, VinciWork's GRC software platform

Commercial in confidence

Marlowe plc 2022 I Results 3

Current trading and outlook

• Strong start to the new financial year with good levels of organic growth consistent with our medium- term high single digit target
• Six acquisitions completed since year end with £26 million capital deployed, further deepening presence in key markets across Consultancy and Intelligence within GRC and assurance within TIC
• Inflationary and recruitment pressures not materially impacting the Group as a result of ability to manage customer pricing and recruitment
• Significant pipeline of earnings-enhancing service and software acquisitions

Commenting on the results Alex Dacre, Chief Executive, said:

"We are pleased to report a strong financial performance in the year and further significant progress in the execution of our strategy.

Our results reflect strong underlying organic growth of 9% and the contribution from acquisitions, which we are integrating successfully. We continue to exceed the growth of our regulatory compliance markets through our ability to cross-sell services and software and our high levels of customer service, which results in low rates of customer attrition. We are delivering at pace on our vision of becoming a one-stop provider for our customers' compliance needs, with run-rate revenue now exceeding £430 million. We have become the UK market leader in compliance software, with 25% of our profits now generated from software, and have further strengthened our operations through effective integration programmes and organic investments, increasing our adjusted EBITDA margin by 250 bps to 18.7%.

We operate in highly attractive acyclical markets with strong structural tailwinds, and benefit from the business- critical requirements for our services, which are driven by increasingly stringent regulations, greater enforcement and increased ESG requirements. We have high visibility with over 85% recurring revenue from delivering our services through SaaS-based subscriptions and multi-year contracts.

As we announced at our recent Capital Markets Day, we remain confident in our progress towards the targets we set in February 2021, which are to achieve run-rate revenue of c.£500 million and adjusted run-rate EBITDA of c.£100 million by the end of FY24, which we expect to deliver materially ahead of schedule.

We have made a strong start to the new financial year, with good levels of organic growth, £26 million of capital deployed in completing six further acquisitions and continued successful integration programmes. Our acquisition pipeline is well-developed and we expect to report on further progress as the year develops."

Commercial in confidence

Marlowe plc 2022 I Results 4

Annual Report and Financial Statements and Notice of Annual General Meeting

The Company will shortly publish its Annual Report and Financial Statements for the year ended 31 March 2022 together with a notice convening the Company's annual general meeting. The AGM will be held at 10am on 14 September 2022 at 20 Grosvenor Place, London, SW1X 7HN.

The FY22 Annual Report and Financial Statements and the Notice of AGM will be posted to shareholders and will be capable of being viewed at or downloaded from the Company's corporate website at www.marloweplc.com.

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Marlowe plc 2022 I Results 5

CHIEF EXECUTIVE'S REVIEW

Group Results

The Group delivered a strong financial performance in the year with revenue increasing 65% to £315.9 million (FY21: £192.0 million), driven by strong organic growth of 11% and the contribution from acquisitions. After adjusting down for the estimated impact of COVID-19 in FY21 underlying organic revenue growth was 9%, representing an acceleration on prior years.

Adjusted EBITDA increased 90% to £54.4 million (FY21: £28.7 million) with adjusted divisional EBITDA margins

increasing 250bps to 18.7% (FY21: 16.2%) as we continue to drive efficiencies and integration synergies, as well as benefit from our pricing power and increased scale. Adjusted profit before tax increased by 123% to £38.1 million (FY21: £17.1 million), and adjusted basic EPS increased 51% to 37.7p (FY21: 25.0p), including the impact of the equity placings in the year.

On a statutory basis the Group has also made a step forward in profitability. Statutory operating profit increased to £10.5 million (FY21: £1.0 million). Profit before tax improved to £5.9 million compared to a £1.6 million loss in the prior year. Basic earnings per share of 0.8p (FY21: (3.1)p) reflected the increased tax provision on deferred tax balances resulting from the change in tax rate to 25% on 1st April 2023.

Our business is highly cash-generative. For the year ending 31 March 2022, the Group generated £34 million of operating cash flow and, over the last 24-month period taking into account the distortive impact of COVID- related deferrals, we delivered cash conversion of 91%, slightly above our FY24 target. At the year-end net debt was £110.7 million (FY21: £43.3 million - cash), excluding lease liabilities of £22.6 million (FY21: £19.0 million), with a proforma net debt/adjusted EBITDA gearing ratio of 1.6x, within our target range of 1.5x-2.5x.

The Group has built major scale across its target markets and is well capitalised to take advantage of further acquisition opportunities. As a result of our significant operating cash flows, we are able to fund bolt-on acquisitions via cash generated from the business, rather than relying on external financing.

Major Progress

Marlowe has successfully become a compliance platform addressing the full life cycle of risk: a proposition we deliver to c.50,000 clients operating across B2B markets, with our clients relying on our one-stop shop of services and software to ensure their businesses have what they need to be safe, efficient and compliant. Key focus areas such as safety, health, wellbeing and ESG continue to take on increased importance for our clients and, as a result, their budgets continue to grow.

We continued our fast-paced momentum during the year with strong organic growth and a well-executed M&A programme. During the year we deployed £314 million on 20 earnings-enhancing acquisitions, of which £267 million was deployed within our GRC division, representing 85% of capital deployed within the year. Of these acquisitions, the largest was Optima Health, which built on our existing occupational health activities to create a UK market leading corporate health and wellbeing platform. We also completed the acquisition of VinciWorks, Corestream and Barbour, consistent with our ambition to become the UK leader in compliance software. Within TIC, our acquisitions included Hydro-X, Alarm Communications ("ACL") and Santia which further deepened our market share across these attractive regulated testing & inspection markets. On a run-rate basis the GRC division now represents c.40% of Group revenue and c.60% of Group adjusted EBITDA, with SaaS ARR representing 9% of Group revenue. A further £26 million has been deployed on six acquisitions since the start of the current financial year across both GRC and TIC.

With our leading market shares, high service and compliance standards and technology-driven model, we are well-positioned to continue to benefit from the favourable growth trends in our markets. We operate in a heavily fragmented UK addressable market estimated to be £8.4 billion, with attractive medium-term growth rates of between 3% and 10% per annum. With Marlowe accounting for 5% to 10% share of each of its markets, the Group has significant scope for future expansion.