2015 Interim Financial Results 2015 Interim Financial Results Welcome Welcome 30 July 2015 30 July 2015 1
This presentation contains statements that are, or may be, forward-looking regarding the group's financial position and results, business strategy, plans and objectives. Such statements involve risk and uncertainty because they relate to future events and circumstances and there are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements. Forward-looking statements speak only as of the date they are made and no representation or warranty, whether expressed or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company’s legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules), the Company does not undertake any obligation to update or revise publicly any forward-looking statement, 2 whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this presentation should be construed as a profit forecast . 2
2015 Interim Financial Results Andy Ransom Chief Executive 30 July 2015 3
Introduction • Good revenue and profit performance in H1 (+5.2% ongoing revenue; 8% ongoing profit growth) • Pest Control growing strongly (+9.6% in H1, 4.8% organic) • Momentum in M&A – 14 bolt-ons (12 in pest) with combined revenues of £21m • Strong cash performance (£55.4m in H1) – on track to meet £100m+ FCF target • £129m reduction in net debt compared to 30 June 2014 – lowest net debt in 15 years • 13% proposed increase in dividend on prior year • On track to achieve our 2015 revenue, profit and cash expectations Good progress in first phase of our RIGHT WAY plan: Now entering next phase. 4
2015 Interim Financial Results Financial Overview Jeremy Townsend CFO 30 July 2015 5
Financial Highlights (Continuing Operations) £ million H1 2015 H1 2014 Revenue at CER 886.1 848.2 4.5% REV Revenue at CER – ongoing* 881.5 837.6 5.2% Adjusted PBITA at CER 106.9 98.9 8.0% Adjusted PBITA at CER – ongoing* 106.5 98.6 8.0% PROFIT Adjusted PBTA at CER 89.1 76.4 16.6% Adjusted PBTA at AER 82.5 77.5 6.5% PBT at CER 76.0 65.6 15.9% Operating cash flow at AER 93.6 51.5 CASH Free cash flow at AER 55.4 4.7 Adjusted EPS at CER 3.80 3.21 18.4% EPS/DIV Adjusted EPS at AER 3.49p 3.26p 7.1% Dividend 0.87p 0.77p 13.0% CER = constant exchange rates AER = actual exchange rates *Ongoing revenue and profit exclude the financial performance of disposed and closed businesses but include results from acquisitions 6
North America At constant exchange rates % Group Revenue % Adj. PBITA • Revenue 1 +8.3% – Organic revenue of +2.7%, pest organic revenue +2.9% 20.1% 12.8% – Revenue from continuing acquisition programme +5.6% – Seven bolt-on acquisitions in H1, generating annualised revenue of c. £14m H1 2015 • Operating profit 2 +19.5% Revenue 1 £176.9m 8.3% Adj. PBITA 2 £17.8m 19.5% – Driven by acquisitions and leverage impact from higher revenues Margin % 10.1% 0.9% • Further margin improvement: +0.9% pts in H1 1 ongoing revenue is revenue from continuing operations excluding revenue from disposed and closed businesses but includes revenue from acquisitions – Reflecting back office and property rationalisation and lower fuel prices 2 ongoing profit is operating profit from continuing operations before amortisation and impairment of tangibles (excluding computer software), restructuring costs and one-off items and excludes profit from disposed and closed businesses but includes profit from acquisitions. 7
Europe At constant exchange rates • Revenue 1 +0.4% (-0.8% organic) % Group Revenue % Adj. PBITA – Good revenue growth in Germany (+3.0%), Southern Europe (+5.2%) and Latin America (+52.8%) (managed out 47.0% 50.2% of the Europe region) – Offset by declines in France (-3.1%) and Benelux (-0.8%) • Operating profit 2 -2.9% H1 2015 – Primarily driven by revenue and margin decline in France Revenue 1 £414.8m 0.4% • Margins -0.6% pts Adj. PBITA 2 £69.7m (2.9%) Margin % 16.8% (0.6%) – Trading conditions remain challenging in certain parts of 1 ongoing revenue is revenue from continuing operations Europe - France and the Netherlands in particular excluding revenue from disposed and closed businesses but includes revenue from acquisitions – Opportunities to support margins through service 2 ongoing profit is operating profit from continuing operations before amortisation and impairment of tangibles (excluding productivity and further reductions in overhead computer software), restructuring costs and one-off items and excludes profit from disposed and closed businesses but • Overall Europe trading performance in H2 expected to be includes profit from acquisitions. in line with H1 8
Middle East Turkey, Africa UK and ROW At constant exchange rates % Group Revenue % Adj. PBITA • Revenue 1 +13.2% – Organic growth +5.5%, acquisition growth of 7.7% largely from Peter Cox 19.2% 23.7% acquisition completed at the end of 2014 – Continued growth from the UK pest control and hygiene categories - pest control benefitting from increased jobbing work in particular H1 2015 – Rest of World operations delivered good revenue growth driven by the Caribbean and South Africa Revenue 1 £169.2m 13.2% Adj. PBITA 2 £32.9m 6.8% • Operating profit 2 +6.8% in H1 Margin % 19.4% (1.2%) • Margins 1.2% pts lower 1 ongoing revenue is revenue from continuing operations excluding revenue from disposed and closed businesses but includes revenue from acquisitions – Reflecting impact of Peter Cox acquisition and the phasing of costs in 2 ongoing profit is operating profit from continuing operations ROW before amortisation and impairment of tangibles (excluding computer software), restructuring costs and one-off items and excludes profit from disposed and closed businesses but includes profit from acquisitions. 9 9
Asia At constant exchange rates % Group Revenue % Adj. PBITA • Revenue 1 +13.3% (+9.0% organic) – Both pest control and hygiene categories performing well 6.0% 3.4% – Operations in the emerging markets of India, China and Vietnam continue to grow strongly - combined revenue growth of 28%. – High single-digit revenue increase from the more mature markets of H1 2015 Indonesia and Malaysia. Revenue 1 £52.9m 13.3% • Operating profit 2 +51.6% Adj. PBITA 2 £4.7m 51.6% Margin % 8.9% 2.2% – Reflecting leverage from higher revenues, ongoing benefits from back office rationalisation and acquisitions (+11.3% contribution) 1 ongoing revenue is revenue from continuing operations excluding revenue from disposed and closed businesses but includes revenue from acquisitions • Margins higher by +2.2% pts in H1 2 ongoing profit is operating profit from continuing operations before amortisation and impairment of tangibles (excluding computer software), restructuring costs and one-off items and excludes profit from disposed and closed businesses but includes profit from acquisitions. 10 10
Pacific At constant exchange rates % Group Revenue % Adj. PBITA • Revenue 1 +4.3% (+3.8% organic) - Due to increased contract work in pest and hygiene categories and 7.7% 9.9% greater job work in pest control • Operating profit 2 +7.9% – Reflecting higher revenues and also supported by procurement savings H1 2015 programme and ongoing branch administration rationalisation programme Revenue 1 £67.7m 4.3% Adj. PBITA 2 £13.7m 7.9% • Margin improvement +0.7% pts Margin % 20.2% 0.7% – Supported by business efficiencies, cost savings and branch 1 ongoing revenue is revenue from continuing operations administration rationalisation excluding revenue from disposed and closed businesses but includes revenue from acquisitions 2 ongoing profit is operating profit from continuing operations before amortisation and impairment of tangibles (excluding computer software), restructuring costs and one-off items and excludes profit from disposed and closed businesses but includes profit from acquisitions. 11 11
Operating Cash Flow At constant exchange rates H1 2015 H1 2014 Adjusted PBITA 99.7 100.2 Restructuring costs (2.3) (3.1) One-off items 0.9 0.8 Depreciation 85.4 92.1 Non-cash items 1 7.9 (2.4) EBITDA 191.6 187.6 Working capital (8.0) (29.3) Movement on provisions (5.1) (8.7) Capex (88.5) (101.2) Fixed asset disposal proceeds 2 3.6 3.1 Operating cash flow – continuing operations 93.6 51.5 Operating cash flow – discontinued operations (0.6) (35.5) Operating cash flow 93.0 16.0 1 Profit on sale of fixed assets, IFRS 2 etc. 2 Property, plant, vehicles 12
Free Cash Flow and Movement in Net Debt At actual exchange rates H1 2015 H1 2014 Operating cash flow – continuing 93.6 51.5 Cash interest (23.5) (34.4) Cash tax (14.7) (12.4) Free cash flow – continuing 55.4 4.7 Free cash flow – discontinued (0.6) (35.5) Free cash flow 54.8 (30.8) Acquisitions (32.7) (41.7) Disposals - 253.1 Restricted cash disposed (IFS) - (16.3) Dividends (33.1) (29.2) FX and other 56.2 40.5 Reduction in net debt 45.2 175.6 Opening net debt (775.0) (1034.8) Closing net debt (729.8) (859.2) 13 13
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