31 July 2019 2019 INTE 2019 INTERIM RIM FIN FINANC ANCIAL IAL RESU RESULTS TS 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, 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
31 July 2019 2019 INTERIM 2019 INTERIM FIN FINANCIAL ANCIAL RESUL RESULTS TS Andy Ransom, CEO 3
H1 H1 20 2019 19 Highlight Highlights 8.8% 8.8% H1 Ongoing Revenue Growth at CER. Ongoing Revenue ahead of 4.2% 4.2% medium-term target (5%-8%) with all Regions contributing. Strong H1 Organic Revenue H1 Organic Revenue Growth (H1 2018: 3.0%). growth in both Pest Control 11.4% 11.4% and Hygiene. H1 Pest Control Ongoing Revenue Growth. 4.8% organic growth (H1 2018: 4.0%). 6.5% 6.5% H1 Hygiene Ongoing Revenue Growth. 4.3% organic growth (H1 2018: 2.1%). 4
H1 H1 20 2019 19 Highlight Highlights 11.6% 11.6% H1 Ongoing Profit Growth at CER. Strong Ongoing Profit £95.9m 95.9m Growth and Free Cash Flow both ahead of H1 2018. Operating margins up 0.4% Strong Free Cash Flow +£22.9m (vs H1 2018). pts and by +0.5% pts in 1.1% 1.1 % pts pts North America. Improvement in Customer Retention. 1.8% pts improvement in Pest Control (12-mth MAT). All All Regions gions Contributed to a strong First Half. 5
H1 20 H1 2019 19 Highlight Highlights £55m £55m 17 deals delivered £55m revenues. 17 high-quality acquisitions c.£121m in cash spent in H1. Strong pipeline. with 12 in Pest Control and $59m $59m 5 in Hygiene in H1. Divestment of 17.8% stake 7 deals in NA in H1 with $59m annualised revenues. in joint venture with Haniel FY 2018 = $53m annualised revenues. for €430m. New Pest mar New est markets ets Jordan (Amman) and Sri Lanka (Colombo). 8 deals in Emerging markets. €430m Divestment of 17.8% share of Haniel JV. In addition to the €520m received in 2017. No tax to pay on sale proceeds. 6
H1 H1 20 2019 19 “The business has performed very well in the first six months with strong organic growth of 4.2%. We have again exceeded our medium-term financial targets for revenue, profit and cash.” “We are confident of delivering further progress in H2 2019.” 7
31 July 2019 H1 2019 H1 2019 Financial Financial Review view Jeremy Townsend, CFO 8
Fina Financ ncial ial Highlight Highlights s H1 2019 £ million Δ Δ Revenue AER CER AER CER 8.8% £1,289.9m Ongoing Revenue* 1,289.9 1,281.0 10.7% 8.8% Ongoing Operating Profit * 152.1 151.8 13.0% 11.6% Profit 11.6% Adjusted PBTA 141.6 141.4 13.7% 12.4% £152.1m PBT 113.8 114.0 3.7% 3.2% Free Cash Flow 95.9 Cash 93% £95.9m Adjusted EPS 5.99p 5.98p 14.0% 12.9% cash conversion** over last 12 months Dividend 1.51p 15.2% *Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses. Ongoing Operating Profit and Adjusted PBTA exclude certain items that could distort the underlying trading performance. **Adjusted cash flow conversion on a trailing 12-month basis 9
Stron Str ong g Fina Financ ncial ial Pr Prog ogres ess A track record of delivery Strong and sustainable Ongoing Revenue growth: Ongoing Operating Profit growth delivery of Free Cash Flow, 5% – 8%, 3%-4% Organic (CER) c.10% (CER) c.90% conversion** (AER) £m £m £m 4.5% Organic 5 YR 2500 5 YR 5 YR 200 330.0 4.0% CAGR CAGR CAGR 11.5% 15.2% 3.3% 3.5% 2300 280.0 150 3.0% 2100 2.5% 1900 230.0 100 2.0% 1.5% 1700 50 1.0% 180.0 1500 0.5% 130.0 0 1300 0.0% Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to June June June June June June June June June June June June June June June June June June June June June 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 +8.8% growth in Ongoing Revenue, Free Cash Flow of £95.9m, +11.6% in H1 2019 93% cash conversion over last 12 months +4.2% Organic *Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses. Ongoing Operating Profit and Adjusted PBTA exclude certain items that could distort the underlying trading performance. Charts calculated on a 12-month trailing basis. 10 **Adjusted cash flow conversion on a trailing 12-month basis
Nor North th Amer America ica Progress in H1: Ongoing Revenue growth +9.6% Ongoing Revenue growth of 9.6% in H1, 3.7% Organic Organic Revenue growth +3.7% Pest Control growth of 10.3%, up 3.9% Organic, despite unseasonably wet weather in certain parts of the country in Q2, Ongoing Operating Profit growth +14.7% particularly the North East Ongoing Operating Profit growth of 14.7%, reflecting higher @CER revenues Net Operating Margin up 0.5% points at 12.1%, discussed further on following two slides Group Revenue: 38% Group Profit: 30% Seven Pest Control acquisitions in H1 with revenues of c. $59m (c. £44m), ahead of the c. $53m (c. £41m) revenues acquired during the whole of 2018 H1 2019 Growth Ongoing Revenue £482.8m +9.6% Focus for H2 2019: Further delivery of revenue and profit growth, continued M&A and Ongoing Operating Profit £58.4m +14.7% ongoing implementation of Best of Breed programme to drive margin expansion Operating Margin 12.1% +0.5% points 9.6% 9.6% incr increa ease in se in reven enue ue an and 50 d 50 bp bps i s impr mproveme ement nt in in Net Net Ope Operating ting Mar Margin gin 11
North Nor th Amer America ica Update on plan to deliver $1.5bn revenue, 18% Net Operating Margins Building scale and local density on national footprint with +300 branches, 45 distribution centres, +8,000 colleagues. Targets (FY) / Activity Progress in H1 2019 4% to 5% 3.7% Organic growth Organic growth An improving performance on H1 2018, but held back by wet weather in North Eastern areas of the country in Q2 $50m to $80m additional c. $59m acquiredrevenues in H1 revenues p.a. from A very strong performance and ahead of the c. $53m of acquisitions acquired revenues for the whole of 2018, positioning us well for the full year Best of Breed (BoB) back Further good progress in procurement and property, office programme IT programme progressing to plan Net Operating Margin 50 bps improvement in H1, supported by organic revenue growth, synergies from acquisitions beginning to flow through and savings from our Best of Breed programme, partially offset by a greater mix of lower- margin product sales 12
Nor North th Amer America ica Path to $1.5bn revenue Path to 18% Net Operating Margins • Remain on track to deliver $1.5bn revenue by the • Progress on margin delivery in H1 on track for 2021 end of 2020 target • H1 revenue growth in line with 10% CAGR required • Steady progress with IT transformation to replatform in 2019/20 to hit target the business and deploy Group IT applications effectively • Our growth expectations remain at 12-15% per • Margin improvement is back-end loaded reflects the annum - Organic (4-5%) and M&A (8-10%) timing of our systems replatforming and applications • M&A pipeline remains strong deployment Reven enue ue ta targe get on t on tr trac ack k for or 20 2020 20, , 18 18% % mar margins to gins to be be deliv deliver ered ed by end by end of of 20 2021 21 13
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