Developing markets and outsourcing trends continuing to drive underlying growth despite challenging economic environment

 
* excluding Olympic and Paralympic Games contract
**at constant exchange rates and adjusted for discontinued businesses and exceptional items
***see page 4 for definition of PBITA

Excluding the Olympic Games contract, sales up 5.8% and improved organic growth of 5.1%.
Adjusted EPS maintained at 9.8p

• Organic growth of 10% in developing markets with revenue of £1,191m (31% of group total and targeting 50% by 2019)
• Group margin excluding exceptional items is lower at 6.0% (6.2% excluding the Olympics Games revenue) due to the challenging US government market and UK contract phasing
• On track to achieve annual cash conversion target of 85%

Olympic and Paralympic Games contract loss of £50m provided for as an exceptional item in H1

• Contract review underway and expected to be completed during second half of September

Continued focus on business improvement

• Service excellence centres established for all core services: manned security, cash solutions and care & justice services – part of a two year programme to support gross margins and profit improvement initiatives
• Restructuring leading to a headcount reduction of 1,100 positions and £30m annualised savings, of which related costs of £24m have been taken as an exceptional item in H1, a large proportion of which relate to Continental Europe, up to £10m further costs are expected in H2

Security remains core to global strategy and continues to provide growth opportunities

• Strong global contract pipeline of £3.8bn per annum across a diverse range of sectors including the strongest visible pipeline in US commercial sector on record

Nick Buckles, Chief Executive Officer, commented:

“We were deeply disappointed that we had significant issues with the London 2012 Olympics contract and are very grateful to the military and the police for their support in helping us to deliver a safe and secure Games.

The overall business has performed well in achieving a similar underlying profit as the first half of last year despite economic challenges, particularly in Europe, and weakness in the US government market. Underlying organic growth in the first half has improved to over 5% overall driven by a strong performance in developing markets which grew by over 10%.

We continue to see good opportunities from outsourcing around the world particularly from governments looking to improve quality of services and reduce costs and we believe that, with our long-term track record, we will continue to play a major role in this sector.

The breadth of our portfolio in 125 countries continues to present many new growth opportunities. Our market leading businesses, broad customer base and £3.8bn per annum contract pipeline give us confidence in the outlook for the Group.”

Download the full Half Yearly Results Announcement

Download the full presentation slides (PDF 1351.1 KB)

Presentation of Results:
A presentation to investors and analysts took place at the London Stock Exchange on 28 August.