2021 Interim Results
A strong performance in H1. All core businesses returning to growth. Excellent M&A in Q2. Full year market consensus expected to increase by c.£10m to c.£15m
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Results |
H1 2021 |
Growth |
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£m |
AER |
AER |
CER |
|
Ongoing Revenue1 |
1,458.3 |
13.6% |
18.3% |
|
Revenue |
1,462.7 |
13.3% |
18.0% |
|
Ongoing Operating Profit |
208.4 |
50.1% |
55.4% |
|
Adjusted Operating Profit |
208.6 |
50.1% |
55.3% |
|
Adjusted profit before tax |
194.0 |
54.5% |
60.0% |
|
Profit before tax |
148.8 |
141.2% |
146.4% |
|
Free Cash Flow |
222.0 |
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|
|
Adjusted EPS |
8.31p |
56.7% |
61.5% |
|
EPS |
6.42p |
153.1% |
161.4% |
2021 Interim Highlights (at CER unless otherwise stated)
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18.3% growth in Ongoing Revenue, 11.7% Organic (Q1: 15.4%, Q2: 21.2%): reflecting momentum in our core businesses in H1 and double-digit Organic growth across all regions and core categories in Q2, as we lapped a significantly COVID-impacted Q2 in 2020 |
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18.7% growth in Pest Control, +8.5% Organic, reflecting further progressive improvements in North America, Asia and Pacific and an encouraging return to Organic growth in Q2 in Europe, LatAm and UK & Rest of World. The category has delivered 20% revenue growth on H1 2019 |
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– |
9.3% growth in core Hygiene (ex. disinfection), +9.0% Organic, aided by return to more normalised levels of regular service provision as lockdown restrictions eased across many of our markets |
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– |
£98.3m revenues from disinfection (Q1: £75.7m, Q2: £22.6m), reflecting expected tapering |
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4.6% growth in Protect & Enhance, +3.9% Organic, with all four businesses (France Workwear, Ambius, UK Property Care and Dental Hygiene Services) returning to Organic growth in Q2 |
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55.4% growth in Ongoing Operating Profit: reflecting broad-based growth in all major reporting countries, regions and categories. Statutory profit before tax up 141.2% to £148.8m (at AER) |
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Very strong Free Cash Flow of £222.0m in H1 (151% conversion): customer collections remain strong, no material escalation in bad debts or major insolvencies |
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Continued roll-out of PestConnect in H1: 38% increase in customer sites and 32% increase in devices in the field, with over 200,000 devices now deployed globally across 28 markets (including new markets of China, Hong Kong and United Arab Emirates) |
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Growing customer interest in air hygiene products and services: encouraging progress with sales of Inspire Air72 and VIRUSKILLER™; significant progress in Asia and the UK, with key hygiene partnerships signed in H1, including the UK's O2 arena |
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An excellent M&A performance year to date: |
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24 completed acquisitions in H1 – 21 Pest Control, 2 Hygiene, 1 Protect & Enhance (Ambius) – in 13 countries across all regions, including 8 in North America and 7 in Europe |
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Agreement to enter into a merger and acquisition transaction with Boecker World Holding SAL (Boecker), a leading pest control and environmental health business in the Middle East, operating across the UAE, KSA, Jordan, Kuwait, Lebanon, Nigeria and Qatar, with acquired annualised revenues in the year prior to purchase of c.£37m |
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Total annualised revenues in the year prior to purchase of £147.7m* for businesses acquired in H1, Boecker (due to complete on 2 August) and EPS (which completed in December 2020) |
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Actual cash spend in H1 against current and prior-year acquisitions of £261.1m |
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Full year expenditure on M&A now anticipated to be in the region of £450m to £500m |
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Liquidity headroom in excess of £1.0bn at 30 June, including £550m of undrawn RCF. Net debt to EBITDA ratio 1.67x (31 December 2020: 1.6x) |
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Declared interim dividend of 2.09p per share, reflecting strong H1 and confidence in H2 |
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*EPS revenues were quoted in the 2020 Preliminary results statement, but are included again here for comparability with cash paid in January 2021.
Andy Ransom, CEO of Rentokil Initial plc, said:
“We have made excellent progress in the first six months of the year. Our revenue growth of 18.3% demonstrates a clear recovery of our core businesses as economic conditions improve across many of our markets. We have also delivered a very strong cash performance in H1 with Free Cash Flow conversion of 151%, aided by collections some 26% ahead of prior year.
“We have been very active in M&A in H1 and have acquired some outstanding businesses both in North America and across our other regions of Europe, Latin America, Asia and the Pacific. We are particularly pleased to announce our transaction with Boecker which expands our businesses across the Middle East and in Africa, in line with our strategy of focusing on important growth cities of the future. Given the strength of our performance in Q2, we now expect our spend on M&A for the full year to be in the region of £450m to £500m.
“We delivered a strong performance in H1, slightly ahead of our expectations, and given the momentum in the business and agility demonstrated through the pandemic to date, we are confident of making continued progress in the balance of the year. Assuming trading conditions around the world continue to improve and are not significantly impacted by rising cases of new COVID-19 variants, we anticipate mid-single digit organic growth in our core businesses for 2021 and, despite the anticipated tapering off in disinfection presenting more challenging comparatives