- New contract sales with total value of £1.2bn (+26%)
- Organic revenue growth of 4.1%
- Emerging markets +12.1%
- Developed markets in line with the prior year
- Underlying PBITA1 6.3% higher at £185m (2013: £174m)
- Emerging markets PBITA up 14.7%
- Developed markets PBITA up 6.7%
- Corporate costs of £28m an increase of £8m including £6m non-cash pension and LTIP costs
- Underlying Earnings1 of £86m (2013: £76m), up 13.2%, EPS up 3.7%
- Total cash generated by continuing operations of £212m (2013: £224m) included cash flow of £185m (2013: £148m) from operating businesses and one off corporate items of £27m (2013: £76m)
- Net debt position as at 30 June 2014 was £1,680m, reflecting the normal seasonal effect of lower cash flows in the first half which is expected to reverse in the second half of 2014 and the £109m electronic monitoring settlement
- Portfolio management: proceeds of £89m in six months. A further £37m due to be received in the second half of 2014 from the sale of business in Sweden
- Interim dividend maintained at 3.42p/share (DKK 0.3198)
|Underlying Results1,2||Total Results3|
|6 months ended 30 June||6 months ended 30 June|
1 At constant exchange rates. The results at actual exchange rates are set out on pages 15 to 31. To clearly present underlying performance, specific items have been excluded and disclosed separately – see page 3.
2 2013 results are presented at constant exchange rates and have been restated for the adoption of IFRS10 and IFRS11. 2013 PBITA has been re-presented for businesses subsequently classified as discontinued – see page 4 for details.
3 At constant exchange rates, including specific items. 2013 results have been restated for the adoption of IFRS10 and IFRS11 and have been re-presented for businesses subsequently classified as discontinued – see page 4 for details.
4 Earnings is equal to profit/(loss) for the period attributable to equity holders of the parent – see page 3.
5 Earnings per share is based on the average number of shares in issue of 1,545m (2013:1,403m) – see pages 5 to 6.
Ashley Almanza, Group Chief Executive Officer, commented:
“The group made good progress and delivered a satisfactory financial performance in the first six months winning new contracts with a total value of £1.2 billion and producing a 13.2% increase in earnings. There remains much to be done to capture the full potential of our strategy and to strengthen the group’s performance.
Demand for our services was robust, particularly in emerging markets. We are restructuring and rebuilding our businesses in UK & Ireland and in Europe. We have seen growth return to the North American market.
Profit before interest, tax and amortisation of £1851 million was 6% higher than the same period in 2013, which reflects revenue growth and improved operational gearing, as we begin to capture benefits from restructuring and the implementation of our “Accelerated Best Practice” programmes.
With our increased focus on cash management, cash flow from operating businesses was £185 million, a 25% improvement on the same period last year. Total cash generated by continuing operations, including one off corporate items, was £212 million (2013: £224 million).
Following the review of the group’s strategy and business last year, we identified a number of strategic priorities and in each area we have made progress in moving from planning into execution:
Portfolio and performance management: We have divested six businesses at attractive exit multiples over the past year, for aggregate proceeds of £160 million, including our business in Sweden which we sold in July 2014. In addition, we have taken the decision to discontinue a further 15 smaller businesses and have an ongoing sale process for our US Government Solutions business. Portfolio management remains important for strategic focus, capital discipline and performance management.
Organic growth: We won new work with an annual contract value of over £600 million, and total contract value of £1.2 billion whilst, at the same time, replenishing our pipeline which now stands at an annual value of £4.9 billion.
We continue to see further opportunities to sell additional services in our key markets and, in line with our previously announced plans, we have invested an annualised £15 million to strengthen sales and business development capability. We are progressively embedding a consistent approach to sales operations and sales performance measurement.
Accelerated Best Practice and cost leadership: Our Accelerated Best Practice and cost leadership programme gathered momentum with the appointment of key management and subject matter experts to focus on direct labour efficiency, organisational efficiency, route planning and telematics, IT standardisation, procurement and shared services. Our major restructuring programmes to strengthen the competitiveness and profitability of a number of key businesses, principally in the UK, Ireland and Europe, are being implemented in line with the detailed plans which were developed last year. These programmes and cost initiatives are beginning to deliver improved operational leverage.
People and values: We made good progress with the implementation of our corporate transformation programme. We have enhanced our risk management controls and practices, strengthened contract management and are adopting a more systematic approach to measuring customer service. A group-wide internal communications programme is also underway to reinforce our group values and, in line with the Safety First value, there has been concerted focus on health and safety policy and practice.
We have achieved a satisfactory financial performance and are making good strategic progress. Demand for our services continues to be strong in emerging markets, we are restructuring and rebuilding our UK & Ireland and European businesses and we have seen good growth return to our North American markets. The group is making encouraging progress, there remains much to be done to capture the full potential of our strategy and to strengthen the group’s performance.
1 To clearly present underlying performance, specific items have been excluded and disclosed separately – see page 3.
Download the full Half Yearly Results Announcement