Interim Results 2016 Welcome.
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
2016 Interim Results: Introduction Andy Ransom Chief Executive Officer
Strong overall performance in H1 2016 On track to achieve our 2016 revenue, profit and cash expectations.
2016 Interim Results: Financial Review Jeremy Townsend Chief Financial Officer
Financial Highlights (Continuing Operations) H1 2016 £ million CER AER Δ CER Δ AER Revenue – ongoing 1 928.4 979.5 11.5% 16.3% Adjusted 2 PBITA – ongoing 1 107.1 114.3 11.0% 16.2% Adjusted 2 PBTA 91.7 98.3 16.9% 22.5% PBT 74.9 80.4 9.2% 14.4% Adjusted 2 EPS 3.90p 4.20p 17.1% 23.5% Free cash flow 57.1 Dividend 0.99p 13.8% 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, one-off items and net interest credit from pensions 6
Progress Against Medium-Term Targets Building a track record of delivery against targets Strong and sustainable Mid-single digit High-single digit delivery of free cash revenue growth profit growth flow (£110m+ pa) Profit 1,2 Growth Revenue 1 Growth Free Cash Flow 3 £m £m £m 1900 Revenue (£m) Organic Growth % 2.5% 250 13.8% APBITA Margin 170 1800 240 13.6% 150 3 YR CAGR 3 YR CAGR 2.0% 1700 230 6.8 % 8.7 % 130 13.4% 1600 220 £110m+ 1.5% 110 13.2% 1500 210 90 1400 200 13.0% 1.0% 70 1300 190 12.8% 50 1200 180 0.5% 12.6% 30 1100 170 1000 0.0% 160 12.4% 10 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 Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June 2013 2014 2014 2015 2015 2016 2013 2014 2014 2015 2015 2016 2013 2014 2014 2015 2015 2016 Note: H1 organic growth +2.5% (FY 2015: +1.8%) 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets and restructuring costs and one-off items 3 Free cash flow from continuing operations 7 Charts calculated on a 12-month trailing basis
Group revenue Group operating profit North America 29% 22% At constant exchange rates Strong perfor mance in H1 2016 suppor ted by acquisitions Revenue up 39.9% (+4.0% organic), operating profit up 64.8% H1 2016 Growth +4.7% organic growth from Pest Control £264.9m +39.9% Revenue 1 Operating profit increase (and +1.8% point margin improvement) reflects leverage from higher revenues and acquisitions, including £31.4m +64.8% Operating profit 2 synergy delivery in Steritech Integration of Steritech proceeding well – on track to meet 2016 11.9% +1.8% points Operating margin profit target of $25m to $30m Seven acquisitions in H1 plus Residex on 1 July with annualised revenues of c.$118m Focus for H2: Continued focus on driving organic growth initiatives Ongoing integration of Steritech, Residex and other acquisitions Further margin improvement opportunities from M&A, scale efficiencies and density 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, restructuring costs and one-off items 8
Group revenue Group operating profit Europe 40% 42% At constant exchange rates Revenue flat, good growth in central Europe Overall perfor mance held back primarily by France H1 2016 Growth Good revenue growth in Germany (+2.9%), Latin America – managed out of Europe region (+15.3%) and southern Europe £369.0m +0.5% Revenue 1 (+1.1%) – offset by declines in France (-1.0%) and Benelux (-1.0%) Profit decline driven by revenue reduction and pricing pressure in £61.3m -4.3% Operating profit 2 Workwear across the region, France in particular. Workwear revenues down by 1.8% with net margins lower by 1.5% points 16.6% -0.8% points Operating margin Focus for H2: Challenging economic and competitive conditions in France and Benelux anticipated to continue Continued focus on quality initiative in Workwear to mitigate competitive environment and pricing pressure Level of profit decline anticipated to be in line with H1 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, restructuring costs and one-off items 9
Group revenue Group operating profit UK and Rest of World 18% 23% At constant exchange rates Revenue +4.1% (+3.7% organic) in H1 Operating profit +7.7% reflecting leverage from higher revenue H1 2016 Growth Continuation of growth trend in UK pest control and hygiene operations £170.0m +4.1% Further growth in jobbing work in both pest control and property Revenue 1 services, portfolio growth in Hygiene £33.1m +7.7% Operating profit 2 Continued revenue growth in RoW, across all regional clusters in the Nordics, Caribbean, Africa and MENAT 19.5% +0.7% points Operating margin Increase in operating margins reflecting leverage from revenue growth and continued strong cost control Focus for H2: Further improvements in performance through application of successful UK operating model across the region 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, restructuring costs and one-off items 10
Group revenue Group operating profit Asia 6% 4% At constant exchange rates Revenue +11.9% (+7.9% organic growth) in H1 Operating profit +34.3% reflecting leverage from higher revenue H1 2016 Growth £57.9m +11.9% Revenue 1 Good performances from both pest control and hygiene businesses Combined revenue growth of 23.9% from India, China and Vietnam £5.8m +34.3% Operating profit 2 Combined revenue growth of 14.5% from Indonesia and Malaysia, supported by acquisitions 10.0% +1.7% points Operating margin Profit increase reflecting leverage from revenue growth and service productivity improvements from greater density contributing to +1.7% points increase in net margins Three acquisitions in H1 – two Pest Control, one Hygiene – in Hong Kong, China and Malaysia with annualised revenues of £5.1m Focus for H2: Further M&A opportunities sought to build scale in this key strategic market 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, restructuring costs and one-off items 11
Group revenue Group operating profit Pacific 7% 9% At constant exchange rates Revenue +9.4% (+3.6% organic growth) in H1 Operating profit +10.8% reflecting leverage from revenue H1 2016 Growth £66.6m +9.4% Revenue 1 Revenue driven by additional contract revenue from acquisitions, higher levels of jobbing work in Pest Control and improved retention in Hygiene £13.7m +10.8% Operating profit 2 Margin improvement reflecting higher revenues and supported by productivity gains 20.6% +0.3% points Operating margin Four acquisitions in H1 (three Pest, one Hygiene) with annualised revenues of £7.0m Focus for H2: Further improvements in performance through improved service productivity 1 Ongoing revenue and profit excludes the financial performance of disposed and closed businesses but includes results from acquisitions 2 Before amortisation and impairment of intangible assets, restructuring costs and one-off items 12
Opportunity to Build Margins in our Growth and Emerging Markets Nor th America Pest Control Asia £m £m 500 16.0% 120 13.0% 115 12.0% 450 15.0% CAGR CAGR 110 11.0% 23.5 % 9.9 % 400 14.0% 105 10.0% 350 13.0% 100 9.0% 95 8.0% 300 12.0% 90 7.0% 250 11.0% 85 6.0% 200 10.0% 80 5.0% Yr to Dec Yr to June Yr to Dec Yr to June Yr to Dec Yr to June Yr to Dec Yr to June Yr to Dec Yr to June Yr to Dec Yr to June 2013 2014 2014 2015 2015 2016 2013 2014 2014 2015 2015 2016 Revenue (£m) Net Margin % Revenue (£m) Net Margin % Str ong #3 with national scale Driving r evenue g r owth to build scale 13
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