Marlowe plc (MRL) Earnings Call Transcript & Summary

Hello, and welcome to today's Marlowe plc Full Year '23 Results Presentation. My name is Bailey, and I'll be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Alex Dacre, Chief Executive at Marlowe. Alex, please go ahead.

Good morning. I'll start this morning's results call with a summary of another strong full year performance from Marlowe during FY '23. I'll then give a recap of the end-to-end compliance platform we've built and the strategic and operational progress we've made over the year on the back of a particularly active growth period in FY '22. I'd also like to remind you of Marlowe's defensive and resilient characteristics, which are clearly illustrated by the record levels of organic growth during the year and strong cash generation, particularly during the second half of the year. Adam will then take you through the numbers in detail, both on a group and a divisional basis before I explain how we've achieved consistently high and accelerating levels of organic growth and how we've supplemented this growth through selective acquisition and effective integration. I'll then walk you through our software offering, which is now contributing around GBP 20 million of EBITDA before providing some color on the outlook for the coming year. We're pleased to report a strong set of numbers today. Revenue was up 47% to GBP 466 million. EBITDA was up 52% to GBP 82.7 million. This has driven excellent organic growth, the impact of acquisitions, operational and technological improvements and the success of our integration programs. This integration progress can be seen through the continued progress we've delivered in expanding our margins. Divisional EBITDA margins were up 30 basis points to 19% in spite of the dilutive impact of acquisitions. This is one of the clearest indicators of our ability to integrate businesses and create value through unlocking synergies and operational efficiencies, and we're confident that its upward trend will continue in the coming months. Perhaps the key highlight to report is the record level of organic growth that we delivered in the year at 10% with an accelerating trend in the second half of the year. This growth is supported by strong structural market tailwinds, such as increasing corporate and societal focus on safety standards, employee health and well-being, compliance and organizational governance standards. We then build on these market growth tailwinds through our ability to cross-sell and upsell additional services to existing customers. This is one of the key benefits of providing an end-to-end compliance offering. During the year, we saw strong levels of new business and reducing levels of client attrition. We're keeping clients for longer as a result of the high standards of service and compliance we achieve whilst expanding our share of wallet and increasing client lifetime value. Another highlight of the results was the cash. As expected, for the full year, we delivered strong free cash flow conversion of 90%, in line with our target. Net cash generated from operations rose 119% to GBP 74.3 million with a particularly strong H2 with cash conversion of 127%. Net debt at the year-end was GBP 160.8 million, lower than previous guidance with leverage less than 2x. I'm pleased to announce we've now surpassed our run rate revenue target of GBP 500 million with current run rate revenues at GBP 505 million. Run rate EBITDA is currently GBP 93 million, and we continue to expect to exceed our GBP 100 million target organically by the end of FY '24. Our current addressable market is very large. And whilst FY '23 was a year primarily focused on integration programs and organic growth, we continue to execute selectively on our bolt-on acquisition strategy, deepening our presence in current verticals at attractive valuations. During the year, we completed 11 bolt-on acquisitions for an average multiple of 6.5x, deploying GBP 56 million of capital. Since 2016, Marlowe has incrementally built its offering into the end-to-end compliance platform that we've become today. We deliver a one-stop approach to our clients' compliance needs. We have built the group into the leader in compliance software and services. We're the partner for over 50,000 companies across the U.K., delivering their software or service requirements in core compliance areas such as Health & Safety, HR, Employment Law, Occupational Health, Compliance e-learning, Fire Safety and Water & Air Hygiene. At a broad level, we keep businesses running smoothly, safely, productively, efficiently and in compliance with regulations. We're a team of thousands of Health & Safety consultants, the HR consultants, employment lawyers, occupational health experts, doctors, clinicians, compliant software product developers via safety technicians and water hygiene experts delivering the full range of compliance and the business-critical services and SaaS applications that our clients rely on. Across our business lines, we're typically dealing with the same client decision makers, whether that would be a Head of Compliance and HR Director, Head of Health & Safety or a manager of an SME, who is responsible for their organization's compliance, governance and safety. Nearly all of the software and services that we provide are underpinned by essential regulations, whether that would be the Health & Safety Act, the Employment Rights Act, GDPR, the Equality Act, Anti-money Laundering, Bribery and Corruption or the Fire Safety Act. These regulations are constantly evolving and often becoming more complex. For example, the new Fire Safety Act that came into effect earlier this year, has a whole host of new regulatory requirements. It's this evolution of regulations, coupled with higher regulatory fines associated with non-compliance and enforcement that drive the need for our services. This model is not only strategically attractive but financially compelling, too. We're well placed in uncertain economic times. The resilience of our model and markets is evident in the strong organic growth that we've reported, while simultaneously continuing to enhance our margins. The non-discretionary nature of our software and services, coupled with the multiyear contracted subscription nature of our relationships gives us an excellent future earnings visibility. Approximately 85% of our revenues are recurring. We benefit from long customer relationships of over 12 years. No one customer is over 2% of our revenue. And it's worth touching on our customer base in the context of our resilience. We serve every single sector across the U.K. economy from food manufacturers to pharmaceuticals, from the financial to commercial to legal sectors, from hotels and ledgers to government organizations. We're well diversified. Similarly, we serve both large customers and smaller customers. We tend to offer our HR Employment Law to smaller and mid-sized organizations, but we typically offer our software to midsized or larger enterprise clients. We generate most of our revenue in occupational health from enterprise, but it's a blend in Health & Safety. We're well spread across segments of the economy. Our clients are those who understand the importance of risk management and are willing to invest in it. And it's worth highlighting again our strong cash characteristics. During FY '23, we delivered 90% free cash flow conversion with net cash from operations of GBP 74 million after a very strong second half cash performance. We're in a strong position where we can use the cash we generate to invest in selective bolt-on M&A, while successfully managing our balance sheet. And on that note, I'll hand over to Adam.

Thanks, Alex. In FY '23, we have delivered record levels of organic growth of 10% and complemented this with improving divisional EBITDA margins by 30 basis points to 19%. We have successfully used price to offset inflation on our largest cost line staff, which has increased by around 4%. These price increases are implemented through either inflationary linked multiyear contracts or on the anniversary of annual contract negotiations, both of which happened throughout the year. Cross-sell and upsell continued to accelerate organic growth, which we estimate contributed around 2% to organic growth. The remainder of our organic growth comes from new business, net of customer attrition. We've seen strong levels of new business across the group, especially within our TIC business. We are benefiting from our broad capabilities and excellent geographic reach, which has resulted in Marlowe becoming a provider of choice, who can serve both SMEs and large complex multi-site customers. In terms of margin, acquisitions had a mildly dilutive impact in the year. However, we have continued to drive operational efficiencies through integration investment as we further benefit from improved route density and our ability to triage resources more efficiently and benefit from other scale economies. This has driven a 0.5% improvement in margin, leading to an overall divisional EBITDA margin increase of 30 basis points. Revenue for the year increased by 47% to GBP 465.7 million, this largely reflects the contribution from acquisitions and organic growth of 10%. Adjusted EBITDA increased by 52% to GBP 82.7 million, with margins increasing to 19%. Adjusted operating profit increased in line with the growth in EBITDA. Net finance costs increased GBP 10.7 million, reflecting increased borrowing costs following significant increases in base rate. We stood at 0.75% at the start of the year and increased to 4.25% by the end of the year. In addition, we had higher utilization on our debt facility compared to the prior year as we've selectively executed on bolt-on acquisitions. The net result of this is that adjusted PBT still increased strongly by 41% to GBP 53.6 million, and adjusted EPS increased by 20% to 45.3p. Reflecting the higher average number of shares in issuing following the FY '22 placings. In GRC, we have consolidated our progress on the back of a transformational year in FY '22. Revenue increased by 105% driven in large part by the increase of our occupational health business through the acquisitions of Optima and TP Health, but also through bolt-on acquisitions in compliance software and HR Employment Law & Safety. Organic growth for the year was 8%, an acceleration on the 7% reported at the half year, with particularly strong growth coming from our compliance software and occupational health activities. Adjusted EBITDA increased 81% to GBP 51.5 million, and GRC now represents over 60% of group adjusted EBITDA contribution. Adjusted EBITDA margin was 26.7%. This represents an expected reduction from last year as a result of mix from M&A, the lower margin profile, occupational health now making up a significantly larger overall share of the division. GRC margins, excluding the dilutive effect in occupational health have increased on the prior year, reflecting operational efficiencies delivered. We expect to accelerate both GRC organic revenue growth and see margins move towards 30% as we drive operational and revenue synergies on the back of the successful integration investment made within the year. We completed 6 bolt-on acquisitions in the year for GBP 36 million, all of which will be in the first half, which further deepened and broadened our activities in this area. Our TIC division continued to accelerate on its already impressive performance in the second half. Revenue was up 23% to GBP 273 million. Organic growth was a record 11% reflecting particularly strong performance within our Fire Safety & Security business and above-market growth within our Water & Air business. We deployed GBP 20 million on 5 acquisitions, all apart from one, which were completed in the first half. Adjusted EBITDA increased 20% to GBP 36.8 million, and we've successfully maintained margins in the year after several years of consecutive margin growth. We expect margins to reach 15% and then to increase over the coming years as we benefit from integration synergies, route density and technology, such as the recently deployed proprietary ERP system within our Water & Air Hygiene business. FY '23 is a record year in terms of cash generation. Net cash from operations more than doubled in the prior year to GBP 74 million. We saw a particularly strong second half in terms of cash flow as the temporary effects in place at the half year unwound as expected. Operating cash flow after restructuring costs, interest and tax was GBP 34 million and underlines the ability of the business to generate cash. Free cash flow conversion after CapEx but before the investment in restructuring costs as a percentage of adjusted operating profit was 127% in the second half and sat at 90% for the full year. We saw strong debtor collections in the final quarter after debt days came under pressure in the third quarter. Accrued income balances as a percentage of revenue returned to levels similar to those at the beginning of the financial year after a temporary increase in the first half, driven by the implementation of the Wave ERP system in our Water & Air business. CapEx for the year increased to GBP 16.4 million, have remained relatively consistent as a percentage of revenue at around 3%. In terms of net debt and leverage. Net debt, excluding leases, finished the year GBP 160.8 million, around GBP 10 million lower than the guidance we provided in March. Leverage reduced slightly from the half year and stands at 2x in the middle of our target range. We expect to benefit from reduced levels of restructuring costs in FY '24 as the cash generation of the business continues to propel forward, although we will retain an inherent lean towards second half cash generation due to the natural working capital dynamics of the business. We have placed a large focus on integration within the year on the back of the GBP 320 million capital deployed in FY '22. Integrating acquired businesses effectively is a key objective for the Board and senior management teams. Integration programs for acquired businesses typically take 6 to 12 months from when that integration program begins, depending on the size and complexity to any of the acquisition. As a result, there is a lag between capital deployed and associated restructuring costs. We have consistently indicated that we see restructuring costs associated with integration as part of the cost of investment equation, and we factor them into our return on investment model. In FY '23, we invested GBP 21 million into integration, of which GBP 10 million seeds within the year and has fall underway. The remainder will run off in during FY '24 and or in the case of integration results potentially move on to other integration projects. Around half of this cost relates to staff restructuring, essentially duplicated roles and redundancy costs. We remained largely rate integration resource, software and system upgrades and property costs. The group hosted a Capital Markets Day on March 23, called "Building a Platform For Growth" which provided significant detail and rationale surrounding integration investment and a deep dive into current integration programs, namely those projects within occupational health, e-learning and Water & Air Hygiene which are all still running to plan with costs falling away on schedule. We also plan to hold an occupational health teaching later in the year, which will highlight the key benefits of the integration program currently nearing completion. Marlowe continues to use M&A as a tool to grow. And in FY '23, we've deployed a further GBP 56 million on 11 selective acquisitions. This was a significant reduction on the prior year as we put more focus on embedding the significant number of acquisitions made in FY '22 and driving the associated synergies. We invested close to GBP 700 million over 83 acquisitions today when including restructuring and acquisition costs as part of the total invested capital equation. And this invested capital has created a business with a combined run rate profits of GBP 100 million when excluding head office costs. This implies a total pretax return on invested capital of 14%, an improvement on the 13% reported at the interim results with both GRC and TIC improving in close to our 15% target. Within TIC, which is now returning 22%, you can see the impact of the longer development time frame, which we started building 7 years ago. Our GRC division is a more recent venture with a significant proportion of the GBP 320 million spent on deals in FY '22 deployed into GRC. So the returns are more nascent. We expect the returns in this division to increase significantly over time as these markets are seeing strong structural growth and will create further value over and above the market growth. This improvement can already be seen. GRC returns are now at 12%, when compared to 10% as reported at our interim results in November 2022. We expect the overall return on the existing investment base to continue to improve over time, and we'll focus on driving an OPAT return on invested capital. In terms of technical guidance, looking forward, we expect to see continued improvement in cash generation of the business, driven by the reducing level of restructuring costs, which will reduce to around GBP 10 million to GBP 12 million in the year and this includes recently acquired businesses. The majority of this will fall in the first half. Finance costs based on the current level of interest rates are expected to be in the region of GBP 15 million for FY '24. Working capital usage will reflect continued organic growth and will also be weighted towards the second half of the year. In terms of tax, the corporation taxes increased 25% from the 1st of April 2023, and this will lead to both a higher tax charge and an increase in cash tax paid. We expect CapEx to remain between 3% and 4% of revenue with the re-platform of our Barbour business, one of the major projects being undertaken in the year. Non-cash amortization of acquired intangibles will increase between GBP 25 million and GBP 30 million, depending on the level of M&A activity. So in terms of the financial ramp-up for May, we're heavily focused on consolidating the business through integration in the current financial year. Despite this focus, we've also seen strong underlying performance, particularly within the second half with organic growth of 10%, coupled with margin enhancement of 30 basis points. Finance costs have increased significantly due to the increase in base rates and higher utilization on our debt facility. We have made significant progress with all our integration projects and we expect to see exceptional costs materially reduced in the current financial year with a major reduction in H2. We've seen a material step forward in cash generation, with operating cash flow of GBP 74 million, an overall cash conversion of 90%, with particularly strong cash conversion of 127% in H2, helped by the unwind of H1 headwinds as expected. And as a result, leverage was just below 2x at year-end. Our run rate revenue and adjusted EBITDA continued to increase. We have now surpassed our end of FY '24 revenue target of GBP 500 million, and we expect to reach GBP 100 million EBITDA target organically. On that note, I'll hand back to Alex.

Our confidence in our future financial performance is borne out by our track record of consistent execution. Today, organic growth is running at 10%. As you can see, this is a major acceleration from the 5% we were generating in FY '19. We undertake a completely like-for-like analysis on revenue growth to give investors the clearest picture of growth. We do this by taking the current year's revenue, including revenue generated in the year by acquired businesses. We then adjust the prior year revenue to include the revenue generated by the acquired businesses as if we'd owned them during that period too. So we're seeing a like-for-like comparison between the current years and prior years. And crucially, how both acquired businesses along with our core business are performing organically. Our current performance reflects both the attractive structural growth rates of the GRC and TIC markets in which we operate and the faster growth rates of segments such as software, but also the organic initiatives we implement such as cross-sell and upsell, alongside the enhanced service levels we now achieve and the focus we apply to sales and marketing. I want to focus on integration for a moment and why we put a large focus on integrating businesses. We've completed 83 deals to date. And put simply, if we didn't invest in integration and drive acquisition-related restructuring programs with the intensity that we do, we wouldn't have been able to build the group to the scale that we've achieved today. It's because of this high focus on integration, that divisional EBITDA margin has improved to 19% in FY '23. This is crucial and perhaps the clearest indicator of our ability to integrate businesses and create value through unlocking synergies and operational efficiencies, such as merging back-office functions, integrating service delivery, rolling out our tech platforms within acquired businesses and benefiting from economies of scale such as route density. Integration is a key KPI for our management teams and will continue to be as we selectively bolt-on acquisitions to our current compliance business lines and explore new verticals in the coming years. As of today, we conservatively estimate our addressable market to be around GBP 8.6 billion with a blended growth rate of around 4% to 5%. As we broadened our offer into new compliance areas, the size of the market opportunities increased. We're market leaders in 3 of these segments. But as you can see, these markets are fragmented, and we only occupy a relatively small percentage of them. We remain focused primarily on executing on the low-risk accretive bolt-on acquisitions, which our competitors aren't built to deliver. We're able to source these types of deals ourselves and transact off market, which means we can be highly selective in terms of identifying businesses that meet our criteria. Whilst we're focused on the U.K., our GRC markets are international, and we observed very similar business environments in other parts of the world with regard to regulated service areas of Health & Safety, HR compliance, occupational health and particularly the compliance software space. In time, we also expect to enter adjacent compliance verticals such as ISO certification, Food safety or Cyber Risk. All of which offer very good synergies with our existing business. Since 2019, software has become a central part of our proposition which now accounts for GBP 43 million of ARR, around GBP 20 million of EBITDA and is supporting the acceleration of our organic growth. Our digital products serve over 3 million users. And on a stand-alone basis, Marlowe's compliance software division would be one of the largest GRC software businesses in the U.K. Individually, our digital products are leading in their niches, but together, they offer a comprehensive solution of regulatory data and information, enterprise risk management, compliance e-learning, employee well-being and governance orders and workflow tools, which we're increasingly connecting and cross-selling. And being able to deliver software alongside services, provides us with a major advantage against our service or software-only competitors. Our consultancy and advisory services help our clients to understand and audit their compliance obligations, which then can be tracked, managed and controlled via our software. And we find that clients who take both software and service from our group achieved much higher standards of compliance, so software supports our service strategy, too. These platforms are growing at a fast rate, and they benefit from highly attractive investment characteristics. We're able to add additional users with a low incremental cost to deliver, which leads to margin expansion. And we've seen this within the year. Revenues are extremely predictable and display highly attractive cash characteristics, and we consistently achieved net retention rates of over 100%. Taken as a whole, our SaaS platforms are increasingly providing an almost end-to-end solution to our clients' governance, risk and compliance strategies. We are positioned very favorably to benefit from the further digitalization of the compliance landscape, and we see a long-term opportunity to transform our markets through greater adoption of software and digital applications. We thought it was worth highlighting a recent and improving cross-sell example in action. This took place in our HR and Employment Law business, WorkNest. WorkNest was first retained to help a large U.K. hospitality group with an employment tribunal case for approximately GBP 5,000. The litigation team did such a good job that we would then ask to provide subscription-based employment lawyer advice for their in-house HR team on a retainer of about GBP 85,000. We were then able to cross-sell our retained health and safety consulting after a claim rose against the company for a failure to adhere to documented safety checks for a further GBP 120,000 retainer. Whilst one of our health and safety consultants was completing their annual risk assessment, it became apparent that the client's compliance training arrangements were substandard, and we were able to upsell onto them a digitally learning course for a further GBP 85,000 per annum to roll out to all of their staff. And recently, this has developed further. We've been able to upsell a further book of e-learning courses for an additional GBP 80,000 per annum. It's a simple story, but one that continues to grow and showcase how our strong relationships, compliance capabilities and shared customer channel can turn a GBP 5,000 annual retainer into about a GBP 400,000 annual subscription through cross-sell and upsell with significant further opportunity remaining. As you can see on the page, in February 2021, we said we doubled group revenues to GBP 500 million and triple EBITDA to about GBP 100 million, whilst delivering 90% cash conversion. I'm pleased to announce that we've now surpassed our GBP 500 million target almost a year ahead of schedule. This is thanks to continued strong organic growth and selective acquisition. Run rate adjusted EBITDA is now GBP 93 million, and we expect to reach our end of FY '24 GBP 100 million target organically. When further bolt-on M&A is taken into account will exceed this original target. The group has attractive cash dynamics and cash flow conversion for FY '23 was 90%, in line with our 90% target. This cash we generate is then used on a selective basis to invest in bolt-on acquisitions, whilst maintaining a strong balance sheet. A quick wrap up of the highlights of the year then. Marlowe is an end-to-end compliance platform, delivering services and software to help you manage all of your businesses regulatory compliance obligations. We're delivering record levels of organic growth in defensive markets that are all undergoing long-term structural growth. We're then compounding this growth through selective bolt-on acquisitions and effective integration programs. This focus on integration is allowing us to improve our margins year-on-year, and we expect this trend to continue this year and beyond. We continue to successfully use price to maintain our margins, and we've seen good levels of new business alongside organic growth at the start of the new financial year. We've achieved strong cash generation in the second half of the year as we guided to at our interims, with cash conversion of 90% for the full year and GBP 74 million of cash generated from our operations. We're successfully managing our balance sheet with our leverage position at year-end being just below 2x. We've now surpassed our GBP 500 million run rate revenue target and expect to reach our EBITDA target organically by the end of FY '24. We have a clear and proven strategy and we've made a positive start to the new financial year with strong levels of organic growth. I'd like to thank you for listening today. We'll now have a short pause as the operator opens the lines for the analyst Q&A session, which will begin imminently if you could be patient for a few short moments.

[Operator Instructions] Our first question today comes from the line of Sam Dindol from Stifel.

Congratulations on good results. Three questions from me, please. Firstly, on M&A in FY '24. Can you give us a sense of how much you'd be hoping to do this year? Is it sort of spending free cash flow and keeping leverage around 2x? Is that how would you think about it? Secondly, on GRC and the potential international expansion of that business, particularly in software, which geographies would be attractive? And do you think you would need to do that via platform deals rather than bolt-ons? And then finally, on returns, do you think GRC should have higher returns than TIC eventually as that business matures?

Thanks, Sam. Why don't I kick off on those questions, and then Adam can chip in. I mean, from an M&A perspective, we obviously had a significantly slower year from an M&A growth perspective in FY '23. We spent about GBP 50 million, and that compares to about GBP 320 million prior year. So it's about a sort of 85% reduction. So far, this financial year, we spent about GBP 15 million on a few small bolt-on acquisitions for a multiple of about 6.5x a really attractive, accretive earnings advancing deals. I think in terms of forward guidance at M&A, I think your assumption is probably right. We want to keep leverage around or below that 2x level that we're at the financial year-end. We're a business that's generating around about GBP 40 million of free cash that we can reinvest into selective bolt-on M&A and that's where we're focused at the moment. So continued, a conservative pace of growth focus on organic initiatives, finishing off integration programs alongside selective bolt-on M&A. The GRC piece, we're a U.K.-focused business. I think, that's the first point to make. But I did mention in the presentation earlier that our GRC markets are international in their nature, and a number of our competitors are international. The geographies that are interesting to us in the future are really the English-speaking ones. So the U.S. is the main focus. Some of our competitors operate in geographies like Canada, Australia. Compliance software would be the area that we would look to develop if we were to develop internationally, because we've invested huge amounts in building out brilliant software platforms. We now have software ARR of GBP 43 million, contributing about GBP 20 million of our group profit. So we've become a pretty significant software business in our own right. I think if you were to look at our GRC software business in isolation, it would be one of the largest GRC software businesses in the U.K. We are gradually developing these platforms organically internationally. So Core Stream, which is one of our fastest-growing software businesses, does sell into the U.S. market. We have a really strong partnership with a channel partner, Deloitte, out there, and we're getting really good traction building organic momentum. VinciWorks, which is our e-learning platform, also sells internationally. So the U.S. market is probably the one I guide you to in the future. Adam, do you want to cover the one on returns?

Yes. So obviously, we're pretty open about the fact that we pay slightly higher multiples for GRC businesses than we did for TIC businesses. And obviously, that's driven by the fact that we expect earnings to grow at a quicker rate in GRC in the longer term. So clearly, the byproduct to that is initial returns are lower in GRC. But over time, we expect to get to on par, probably in the long term, slightly above our TIC returns. So I think that's a fair assumption to make.

The next question today comes from the line of Calum Battersby from Berenberg.

Three questions for me, please. So firstly, clearly, there's been recent press speculation around the potential spinout of the TIC business. Obviously, you can't say a great amount here, but could you help us kind of just hear your thoughts on do you think this is something that makes strategic sense as a way to kind of pay down leverage and potentially redeploy capital into that dimensions, the faster-growing GRC business? Or are you able to say that you're not invested upon [indiscernible] divisions. And secondly, a couple of questions on the improved cash performance in H2. So you beat the net debt guidance given in March by about GBP 10 million. So it'd be helpful to understand if that's a one-off timing benefit, the narrow lines or if this is a sustainable net working capital position that can last into next year? And then lastly, you've given guidance on the restructuring costs for the year ahead. So it would be helpful to understand that the expected GBP 10 million to GBP 12 million restructuring costs, are you able to give any approximate guidance to how much of this should come in H1 versus H2, given the current plans?

I mean, why don't I cover the first question and the second 2 are probably for you, Adam. I mean, we note the recent press speculation that you referred to and unable to really comment suffice to say that the Marlowe TIC business is a really high-performing leading provider of critical safety and compliance services. We've built market-leading positions in Fire, Safety & Security, Water and Air quality. And we've got a really proven track record of delivering strong growth, really strong growth over the past 7 years. Our Board regularly reviews our portfolio of businesses with the aim of seeking to maximize shareholder value. But currently has nothing further to report in respect of any strategic action involving any of our businesses at this point in time.

And just in -- so going back to the second question on the sort of closing position on net debt. So yes, it was about GBP 10 million better than we indicated in March. I think in March, we were just -- we've seen better days come under pressure in the sort of third quarter of our financial year. So and the fact that they've recovered very well is probably sort of slightly tempered our forecast when we gave that in March. But in terms of the closing position, though, there's nothing sort of one-off in nature. So you can comfortably use that as a sort of sensible roll forward position to the next financial year. And just picking up on that restructuring cost point, yes, we've indicated GBP 10 million to GBP 12 million. That's with a bit of extra restructuring costs and the GBP 14 million of M&A. The GBP 15 million we completed in the first sort of few months of this year. In terms of timing of that, the majority is going to be in the first half. So it's just sort of GBP 8 million or GBP 9 million in the first half and the remainder is for the second half as we do sort of those smaller bolt-on M&A that we've done at the beginning of this year, we'll be going through those in the second half of the financial year.