2012 Preliminary Results 15 March 2013 1 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 2
Highlights Alan Brown Chief Executive Officer 3
2012 Highlights At constant exchange rates • Revenue and profit improvement in all divisions despite market challenges: – Revenue +2.8%, +0.8%* organic – Acquisitions performing well, contributing 2.4%, net £61m, of revenue growth – Strong finish to 2012: Q4 adjusted profit before tax up 16%, FY +10% • Solid performance from Initial Textiles & Hygiene in tough conditions • Strong performance from Asia (notably Malaysia, China and India) • Good progress from City Link: volumes +17% year on year; losses reduced by £5m of which £4m in Q4 • Initial Facilities transition from single service cleaning to TFM moving rapidly • Expansion of Rentokil Pest Control footprint through acquisition of Western and bolt-ons in North, Central, South America and Middle East Good progress in 2012 and a strong finish to the year *excluding Initial Facilities Spain, where the business is being scaled down to reduce financial exposure 4
Operating & Financial Review Jeremy Townsend Chief Financial Officer 5
Financial Highlights Q4 FY 2012 2011 2012 2011 £m £m £m £m Revenue at CER 683.2 663.1 3.0% 2,614.8 2,544.3 2.8% Adjusted PBITA at CER 78.4 68.9 13.8% 236.1 224.7 5.1% Adjusted PBTA at CER 68.4 59.0 15.9% 203.0 184.4 10.1% Adjusted PBTA at AER 64.4 57.8 11.4% 191.1 184.4 3.6% Operating Cash Flow at AER 91.6 73.7 24.3% 157.0 154.7 1.5% Basic adjusted EPS at AER 7.73p 7.48p 3.3% CER = constant exchange rates AER = actual exchange rates 6
2012 Financial Highlights • Revenue growth across all divisions: � Asia +6.2%, City Link +4.8%, Pest Control +2.8%**, Textiles & Hygiene +2.5%, Initial Facilities +3.8%* • Adjusted operating profit +5.1%: � Improvements in profitability from all divisions (reduced losses at City Link) � Offset in part by increased investment in capability through central costs • Profit before tax £82.7m (at AER) versus loss last year of £50.5m, due to significantly higher amortisation and impairment charges in 2011 • Operating cash flow at £157.0m +1.5% due to reduced working capital outflows • £59m cost savings (versus target £50m); £50m target for 2013 • Final dividend +7.5% to 1.43p (2011: 1.33p) - full year total of 2.10p (notional 5% increase for the year) * excluding Initial Facilities Spain where the business is being scaled down to reduce financial exposure. This has impacted group performance by 7 0.4% but has led to profit improvement in Initial Facilities Spain ** includes Ambius operations, post its integration into the Pest Control Division
Textiles & Hygiene At constant exchange rates Click to edit Master title style • Revenue +2.5% (+0.8% organic): % Group Revenue % Adj. PBITA 2 - Solid performances in Germany and France 33.6 % 49.7 % despite economic slowdown - Growth in Pacific despite adverse weather affecting pest business - Customer retention 89.1% (+2.7% yoy) • +3.5% profit growth (+3.5% organic): Q4 2012 FY 2012 Q4 FY - Strong performance from Benelux reflecting Revenue 227.7 905.1 1.4% 2.5% continued turnaround Adj. PBITA 1 41.4 143.2 2.0% 3.5% - Germany and France performing robustly in 1 before amortisation and impairment of intangible assets, challenging conditions reorganisation costs and one-off items 2 % excludes central costs - Australia pest control adversely impacted by weather 8
Pest Control At constant exchange rates Click to edit Master title style • Revenue +2.8% (+0.4% organic): � Strong performances in North America and % Group Revenue % Adj. PBITA 2 Northern Europe offsetting weaker trading 28.7 % 46.9 % in Southern Europe � New operations in Middle East, North, Central and South America performing in line with expectations • Profit +3.6% (+2.0% organic): � Strong improvements in North America, Q4 2012 FY 2012 Q4 FY East Africa and the Caribbean Revenue 202.4 773.4 4.2% 2.8% � Modest growth in UK and Europe Adj. PBITA 1 40.6 135.2 10.6% 3.6% � Decline in Southern Europe and Ireland reflecting ongoing Eurozone crisis 1 before amortisation and impairment of intangible assets, reorganisation costs and one-off items • Acquisition of Western completed Dec. 2012 2 % excludes central costs 9
Asia At constant exchange rates Click to edit Master title style • Revenue +6.2% (+7.4% organic): % Group Revenue % Adj. PBITA 2 � High single digit growth in mature 3.7 % 2.2 % markets of Malaysia and Singapore � 33% growth from emerging markets of India, China and Vietnam combined Q4 2012 FY 2012 Q4 FY • Profit +39.1% (+35.1% organic) reflecting 25.5 99.0 5.8% 6.2% Revenue revenue growth, productivity and pricing Adj. PBITA 1 2.3 6.4 27.8% 39.1% improvements 1 before amortisation and impairment of intangible assets, reorganisation costs and one-off items 2 % excludes central costs 10
City Link At constant exchange rates Click to edit Master title style • Loss of £26.4m on revenue up 4.8% • 17% growth in volumes but sales mix % Group Revenue contributing to 10% fall in Revenue Per 11.9 % Consignment • Good progress with recovery plan: � 13% reduction in direct costs � Implementation of new volume-based owner driver contracts across depots Q4 2012 FY 2012 Q4 FY � Improved hub and line haul efficiency and Revenue 96.0 321.7 9.1% 4.8% full route re-design Adj. PBITA 1 (2.4) (26.4) 64.2% 15.7% � Investment in improved scanning and GPS technology driving gains in productivity 1 before amortisation and impairment of intangible assets, reorganisation costs and one-off items � Further consolidation of depot network 11
Initial Facilities At constant exchange rates Click to edit Master title style % Group Revenue % Adj. PBITA 2 • Revenue +3.8%* driven by MSS, Modus and 22.0 % 10.3 % Phoenix acquisitions • Underlying revenue -1.7%* reflecting decline in single service cleaning • +9.6% growth in profit (+5.2% excluding acquisitions) reflecting margin improvement, Q4 2012 FY 2012 Q4 FY operational efficiency and cost reductions Revenue 149.8 593.3 0.7% 2.1% Adj. PBITA 1 10.4 29.7 13.0% 9.6% 1 before amortisation and impairment of intangible assets, reorganisation costs and one-off items 2 % excludes central costs *excludes Initial Facilities Spain, where the business is being scaled down to reduce financial exposure 12
Interest At actual exchange rates £ million FY 2012 FY 2011 Net interest on bank/bond/finance lease debt (49.0) (47.0) Other 0.4 (0.8) Underlying Interest (48.6) (47.8) Net return on pension scheme 12.3 3.2 Per income statement (36.3) (44.6) Average net debt £954m £936m Average interest rate on bank/bond/finance/lease debt 5.1% 4.8% 13
Operating Cash Flow At actual exchange rates £ million FY 2012 FY 2011 222.8 224.7 Adjusted PBITA Reorganisation costs and one-off items (51.8) (38.2) Depreciation 203.1 204.2 Non-cash items 1 16.8 7.0 390.9 397.7 EBITDA Working capital (24.7) (32.1) Capex (218.4) (216.4) Fixed asset disposal proceeds 2 9.2 5.5 157.0 154.7 Operating cash flow 1 Profit on sale of fixed assets, IFRS 2 etc. 2 Property, plant, vehicles 14
Free Cash Flow and Movement in Net Debt At actual exchange rates £ million FY 2012 FY 2011 157.0 154.7 Operating cash flow Cash interest (44.2) (44.4) One-off items – financing (31.4) - Financing - other 2.1 0.1 Cash tax (35.6) (44.5) 47.9 65.9 Free cash flow Acquisitions & Disposals (82.8) (32.0) Dividends (36.2) - Special pension contribution (12.5) - FX and other 13.1 0.7 (70.5) 34.6 (Increase) / decrease in net debt (919.0) (953.6) Opening net debt Closing net debt (989.5) (919.0) 15
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