Half-yearly results announcement for the six months ended 30 June 2015
Financial highlights on an underlying basis:
- New contract sales achieved a total value of £1.4 billion (annual value £0.7 billion) with contract retention rates maintained at approximately 90%. Sales pipeline replenished to stand at £6 billion annual contract value
- Revenue from continuing operations of £3,285 million, up 2.8%; up 4.2% excluding completion of three large contracts in Q1 2014
– Emerging markets revenues up 5.7% to £1,183 million; up 8.7% excluding the Manus Island contract; with strong underlying growth in Asia Middle East and Latin America
– North America up 5.4%; UK down 3.2%; Europe up 2%
- PBITAa increased by 4.9% to £193 million (2014: £184 million)
– Emerging markets maintained at £87 million
– Developed markets up 3.2% to £129 million
– Corporate costs of £23 million, down £5 million
- Specific items included net £17 million charge from review and re-measurement of assets, liabilities and legacy contracts. Restructuring charges for the period were £16 million
- Cash from operating businesses was £195 million (2014: £185 million), up 5%.
- Underlying earningsa of £95 million (2014: £86 million), up 10.5%
- Interim dividend up 5% to 3.59p per share
- Net debt at June 2015 was £1,677 million (2014: £1,680 million)
6 months ended 30 June 2015
| Underlyinga Results Constant Rates |
Total Results Actual Rates |
|||
| 2015 | 2014b,c | 2015 | 2014c | |
| Revenue | £3,285m | £3,196m | £3,409m | £3,376m |
| PBITA | £193m | £184m | £185m | £181m |
| Earnings | £95m | £86m | £35m | £78m |
| EPS | 6.1p | 5.6p | 2.3p | 5.0p |
a To clearly present underlying performance, certain items have been disclosed separately. For basis of preparation and an analysis of those items see page 9 of the full announcement.
b To aid comparability 2014 underlying results are shown at constant exchange rates.
c 2014 results have been restated for businesses classified subsequently as discontinued or identified as part of the portfolio management programme – see page 28 for details of the full announcement.
Ashley Almanza, Group Chief Executive Officer, commented:
“We continue to make good progress with our strategic plans, investing in growth and productivity programmes which underpinned strong growth in our pipeline and a 10.5% increase in underlying earnings. We won new contracts with a total value of £1.4 billion and sales, new contract mobilisation and on-going productivity programmes provided increasingly good momentum through the first half. This is expected to deliver further improvements in the group’s performance in the second half.”
Demand for our services was robust, particularly in North America, Latin America and Asia Middle East. As anticipated, revenues were lower in UK & Ireland (-3.2%) and Europe returned to growth (+2.0%).
We continued to make progress with the execution of the strategic priorities identified in November 2013:
Portfolio and performance management: Since 2013, we have divested 16 businesses for total gross proceeds of £263 million and we are disposing of or discontinuing a further 30 businesses. These 46 businesses have combined revenues of c.£1 billion and profit (PBITA) of £3 million on an annualised basis. Portfolio management remains important for strategic focus and capital discipline.
Revenue growth: Since January, we have won new work with an annual contract value of over £680 million
(2014: £600 million), and a total contract value of £1.4 billion (2014: £1.2 billion). In addition there is £2.2 billion of new work in the bidding or negotiation stage that provides good support for future sales.
As set out in November 2013, we are reinvesting efficiency gains into further revenue and productivity initiatives. The net benefit of the gains over investment is slightly ahead of our initial plans.
People and values: Since June 2013 we have strengthened our global leadership team with 135 senior appointments of which 60 were internal promotions and 75 were external hires. We are pursuing a concerted, group-wide safety programme against a backdrop of increased levels of serious road traffic incidents and attacks on employees. We continue to invest in improving customer service and satisfaction as well as contract and risk management.
Dividend
The board has declared a 5% increase in the interim dividend.
Outlook
Our sales, new contract mobilisation and on-going productivity programmes provided increasingly good momentum through the first half and this is expected to deliver further improvements in the group’s performance in the second half. We made good progress with our plans and there remains significant opportunity to realise the full potential of our strategy.
a To clearly present underlying performance, certain items have been excluded and disclosed separately – see page 3.