REG-Capita PLC: Final Results <Origin Href="QuoteRef">CPI.L</Origin> - Part 1
25/02/2016 07:10
Full year results for the year ended 31 December 2015
Continuing to deliver shareholder value
Financial highlights Underlying* Underlying* Underlying* Reported
2015 2014 YOY change
Revenue £4,674m £4,372m +7% £4,837m
Operating profit £639.0m £576.3m +11% £206.6m
Profit before tax £585.5m £535.7m +9% £112.1m
Earnings per share 70.73p 65.15p +9% 7.96p
Total dividend per 31.7p 29.2p +9% 31.7p
share
Highlights
Good financial and operating performance in 2015
• Underlying revenue growth on a like for like basis** of 11.8% including 4.3%
organic growth, excluding businesses exited and held for sale from both 2015
and 2014
• Underlying operating margin* 13.7% (2014 on a like for like basis**: 13.5%)
• Underlying profit before tax* up 9% to £585.5m (2014: £535.7m)
• Underlying earnings per share* up 9% to 70.73p (2014: 65.15p)
• Total dividend up 9% to 31.7p (2014: 29.2p)
• Underlying cash flow* from operations £687m (2014: £644m), a cash conversion
ratio of 108% (2014: 112%)
• Post-tax ROCE* of 14.3% (2014: 14.8%) and 15.0% on a continuing basis
• Reported profit before tax £112.1m (2014: £292.4m), impacted by business
exits and impairment charges
* Excludes non-underlying items detailed in notes 2, 3 and 4 to the preliminary
statement
** The impact of restating 2014 for business exit and other non-underlying
items as detailed in note 1 segmental information
Major contract wins and acquisitions in 2015
• £1.8bn contract wins (2014: £1.7bn) in health, science, local government and
financial services
• Contract win rate of 2 in 3 (by value)
• £402m spent on 17 acquisitions and our Fera partnership to enhance capability
and facilitate future organic growth
• Largest acquisition, avocis, integrated well and providing strong platform
for growth in Europe
A solid start to 2016
• £251m contracts secured to date (2015: £1.1bn)
• Bid pipeline total contract value £4.7bn (February 2015: £5.1bn), with a
weighted average contract length of 6 years (February 2015: 8 years)
• Full year Group operating margin range increased to between 13.0% and 14.0%,
expected for the foreseeable future (previously 12.5% to 13.5%)
Platform to drive further value creation
• We continue to manage the business to deliver strong EPS growth, cash flow
and return on capital
• Dual strategy of organic and acquisitive growth, with continued focus on
proprietary technology led and platform based solutions
• Remain UK centric, whilst gradually extending our footprint across growth
markets, taking our existing services and following existing clients into new
geographies.
Andy Parker, Chief Executive of Capita plc, commented:
"We delivered good financial results in 2015, including 4% organic revenue
growth, an improvement in our operating margin and a high level of cash
generation. Our largest ever acquisition, avocis, has provided a strong growth
platform in Europe. We have re-positioned the business away from certain
non-core lower growth businesses and enter the current year in a strong
strategic and financial position, enabling us to raise our margin target range
to between 13.0% and 14.0%.
In 2016, we are targeting organic revenue growth of at least 4%, driven by the
combination of growth from our divisional businesses and conversion of our bid
pipeline. In the longer term, we remain excited about the significant
structural growth opportunities in our markets and will continue to manage the
business to deliver strong EPS growth, cash flow and return on capital."
Analyst & investor presentation:
Andy Parker, Chief Executive of Capita plc, will host an analyst presentation
in London at 8am UK time today.
There will be a conference call and live webcast of the full event. Details can
be found at www.capita.co.uk/investors.
Participant dial-in : +44 (0)20 3059 8125. Participant password: Capita
(Please dial into the call in time to allow for registration)
Replay: A replay of the conference call will be available for 7 days by dialing
+44 (0)121 260 4861 (access code is 2604602#).
For further information:
Capita plc Tel: 020 7654 2219
Shona Nichols, Corporate Communications
Director
Andrew Ripper, Head of Investor Relations
Capita press office Tel: 020 7654 2152 or
020 7654 2399 out of hours
FTI Consulting Tel: 020 7269 7291
Andrew Lorenz
About Capita
Capita is a leading UK provider of technology enabled customer and business
process services and integrated professional support services. With 75,000
people at over 400 sites, including 80 business centres across the UK, Europe,
India and South Africa, Capita uses its expertise, infrastructure and scale
benefits to transform its clients' services, driving down costs and adding
value. Capita is quoted on the London Stock Exchange (CPI.L), and is a
constituent of the FTSE 100 with 2015 underlying revenue of £4.7 billion.
Further information on Capita can be found at: http://www.capita.co.uk/.
Full year results for the year ended 31 December 2015
Overview
Capita delivered good financial results for the full year in 2015, including 4%
organic revenue growth, an improvement in our operating margin and a high level
of cash generation. Our largest ever acquisition, avocis, has provided a strong
growth platform in Europe. In the year, we have moved the business away from
certain non-core lower growth businesses and reviewed our delivery platforms to
better position the Group for the future.
The Group increased underlying1 revenue by 7% to £4,674m (2014: £4,372m) and
underlying revenue on a like for like2 basis by 11.8%, comprised 4.3% organic
growth and 7.5% from acquisitions. Organic growth was driven by the full
benefit from 2014's contract gains, new contracts started in the second half of
2015 and good underlying performances from our Asset Services and Digital &
Software Solutions divisions. Underlying operating profit1 rose by 11% to £
639.0m (2014: £576.3m) and underlying profit before tax1 increased by 9% to £
585.5m (2014: £535.7m). Reported profit before tax was £112.1m (2014: £292.4m),
impacted by business exits and impairment charges. Underlying earnings per
share1 rose by 9% to 70.73p (2014: 65.15p) and we increased our dividend for
the full year by 9% to 31.7p (2014: 29.2p).
The aggregate value of new and extended major contracts secured in 2015 was £
1.8bn (2014: £1.7bn), comprising 78% new business and 22% extensions and
renewals. Our win rate remained strong at around 2 in 3 by value. We have also
made a solid start to 2016, securing contracts with an aggregate value of £251m
in the year to date. The bid pipeline currently stands at £4.7bn (February
2015: £5.1bn), comprised of 37 bids with a weighted average contract length of
6 years, including 89% new business and 11% renewals and extensions. We
continue to have a large active prospect list of opportunities behind the
pipeline, a number of which are expected to enter the pipeline shortly.
Capita invested £402m, excluding deferred and contingent consideration, in
acquiring 17 businesses and in our Fera Science public sector subsidiary
partnership in 2015. We also exited a number of small businesses, which either
lacked strategic fit or had limited growth potential. We have 3 further
businesses for sale of which 1 disposal completed in January 2016. Acquired in
February 2015, avocis provides a strong platform in Europe and we are now
realising significant growth opportunities in this new region. We continue to
assess many acquisition opportunities and, as evidenced by our decision not to
revise our cash offer of 160 pence for each share in Xchanging in late 2015,
remain a disciplined buyer.
Financial review
• Revenue - the Group increased underlying revenue1 by 7% to £4,674m (2014: £
4,372m). Underlying revenue on a like for like basis2, excluding results from
businesses exited and assets held for sale in both years, increased by 11.8%
including 4.3% organic growth and 7.5% from acquisitions completed in 2014
(2.4%) and 2015 (5.1%). Organic growth was driven by the full benefit from
2014's contract gains, new contracts started in the second half of 2015 and
good performances from our Asset Services and Digital & Software Solutions
divisions, supported by new products and cross selling. Revenue declined in the
Insurance & Benefits Services division, as a result of business exits and
planned contract price step downs which have now come to an end.
• Operating profit - underlying operating profit1 rose by 11% to £639.0m (2014:
£576.3m). There were strong performances from our Asset Services, Digital &
Software Solutions, Local Government, Health & Property and IT Enterprise
Services divisions, the latter supported by acquisitions. Profits declined in
the Insurance & Benefits Services division, as a result of the contract price
step downs, and the Integrated Services division, due to the residual impact of
the Disclosure and Barring Service contract and delivery of Department for Work
and Pensions Personal Independence Payments (PIP) assessments.
• Operating margin - underlying operating margin1 was 13.7% (2014: 13.2%),
reflecting the positive impact on our margin of exiting businesses which lacked
strategic fit. Underlying operating margin on a like for like basis2 increased
by 20bps to 13.7% (2014: 13.5%). The 2014 consolidated income statement has not
been restated for the impact of business exits and other non-underlying items.
If the 2014 underlying consolidated income statement was restated, revenue
would be reduced by £192.8m and profit before tax would reduce by £10.9m. We
now expect underlying full year Group operating margin to be maintained in the
higher range of between 13.0% and 14.0% (previously 12.5% to 13.5%) for the
foreseeable future.
• Net finance costs - the underlying net interest charge1 was £53.5m (2014: £
40.6m). We expect underlying interest costs to be in the range of £60m to £65m
in 2016, reflecting a likely increase in our average borrowing and cost of
debt, as interest rate swaps run off on some of our private placement debt.
• Profit before tax - underlying profit before tax1 increased by 9% to £585.5m
(2014: £535.7m).
• Business exits - we exited a small number of non-core and low growth
businesses, including the disposal of National Dental Plan in 2015 and a health
business since the year end, and we are in an active process to sell a further
specialist insurance business and a justice business. These businesses in
aggregate generated revenue of £162.6m and a trading loss of £1.2m in 2015.
Non-underlying charges in relation to these business exits include a £110.1m
impairment of goodwill and other assets, a £26.8m provision in relation to
disposal and closure costs and £26.3m loss on disposal. The net cash outflow
from these business exits was £0.8m, as detailed in note 2 of the preliminary
statement.
• Other non-underlying charges - other largely non cash non-underlying charges
were £309.0m (2014: £218.4m), including the annual amortisation charge relating
to the Group's intangible assets of £165.0m (2014: £147.1m), an impairment of
assets in our life and pensions division of £76.7m as a result of changes in
legislation in the life and pensions marketplace in the year as detailed in
note 3 of the preliminary statement, a £28.3m impairment of goodwill in
relation to the Group's insurance business as detailed in note 3 of the
preliminary statement and a further £17.2m provision in relation to settlements
in our Asset Services division as detailed in note 8 of the preliminary
statement.
• Reported profit before tax - reported profit before tax was £112.1m (2014: £
292.4m), reflecting the impact of non-underlying charges outlined above.
• Earnings per share - underlying earnings per share1 increased by 9% to 70.73p
(2014: 65.15p), after an increase of non-controlling interests to £8.8m (2014:
£7.3m). Our underlying tax rate was 18.5% (2014: 18.5%). The Group's EPS has
grown at a compound annual rate of 10% over the five years to 31 December 2015.
• Cash flow - underlying cash flow from operations1 was £687m (2014: £644m),
with an underlying operating profit to cash conversion ratio of 108% (2014:
112%). We continue to pro-actively manage working capital across the Group and
expect our annual cash conversion ratio to remain at or around 100% for the
foreseeable future. Net capital expenditure was £198m (2014: £146m), the
increase of which was largely due to a £40m rise in investment in revenue
generating software development. Underlying free cash flow1, defined as
operating cash flow less net capital expenditure, interest and taxation, was £
348m (2014: £368m).
• Net debt - net debt at end December 2015 was £1,839m (2014: £1,491m)
including £21m deferred consideration (2014: £23m) and £67m fixed rate swaps
(2014: £63m). As at 31 December 2015, we had £1,529m of private placement bond
debt of which £141m matures in 2016 and the remainder matures over the period
up to 2027. In addition, we have £300m of bank debt, an undrawn £600m credit
facility maturing in June 2017 and an undrawn £600m revolving credit facility
which matures in August 2020.
Our annualised net debt to EBITDA1 ratio in 2015 was 2.5 (2014: 2.2) and
interest cover1 was 14 times (2014: 16 times). Our aim continues to be to keep
the ratio of net debt to EBITDA in the range of 2 to 2.5 over the long term and
we would be unlikely to incur borrowings which would reduce interest cover
below 7 times.
• Dividends - the Board is recommending a final dividend of 21.2p per ordinary
share (2014: 19.6p), making a total of 31.7p for the year (2014: 29.2p),
representing an increase of 9%. Dividend cover1 is 2.2 times for 2015. The
final dividend will be payable on 31 May 2016 to shareholders on the register
at the close of business on 21 April 2016. The Group's total dividend has grown
at a compound annual rate of 10% over the five years to 31 December 2015.
• Return on capital employed - our post-tax return on average capital employed1
(ROCE) in 2015 was 14.3% (2014: 14.8%), which compares to our estimated
post-tax WACC of 7.3%. ROCE on a continuing basis, excluding businesses exited
and being held for sale, was 15.0% in 2015.
• Total shareholder returns - over the 10-year period to 31 December 2015,
Capita has delivered £1.7bn (net of £274m equity raising in April 2012) to
shareholders through dividends, share buybacks and a special dividend. Capita's
total shareholder return over the same period is 266% compared to 72% for the
FTSE All Share Index.
Sales and business development review
Our Group Business Development team focuses upon major outsourcing, partnering
and asset commercialisation contracts, shaping and bidding for opportunities
across our 11 target vertical markets. We were pleased to announce new and
extended contracts with a total aggregate value of £1.8bn in 2015 (2014: £
1.7bn), comprising 78% new business and 22% extensions and renewals. Our win
rate remained strong at around 2 in 3 by value. We have also made a good start
to 2016, securing contracts with an aggregate value of £251m in the year to
date.
Major contracts announced in 2015
Health
• Primary Care Support England - selected by NHS England to establish a single
provider framework for administrative support functions for GP practices,
dentists, opticians and pharmacies across the UK, with a maximum total value of
£1bn. Our initial contract to deliver administrative services in England
started on 1 September and is valued at up to £400m over 7 to 10 years. We
expect to realise significant savings for NHS England through service
transformation and investing in new technology, processes and operational
improvements.
• Central London Community Healthcare NHS Trust (CLCH) - signed a contract with
CLCH to form a strategic partnership to deliver corporate services including
ICT, HR (payroll and recruitment), estates and facilities management, followed
by the planned delivery of finance services. The contract is expected to be
worth £80m over 10 years and started on 1 September 2015.
• NHS England Support Services Framework - approved by NHS England to join the
Lead Provider Framework for Commissioning Support Services. We were selected as
preferred bidder for our first contract under this framework with Barking and
Dagenham, Havering and Redbridge in February 2016.
Science
• Fera public sector subsidiary partnership and Department for Environment,
Food & Rural Affairs (Defra) contract - appointed by Defra to form a
partnership (75% owned by Capita and 25% owned by Defra) to operate the Food
and Environment Research Agency (Fera), including a service agreement with
Defra and the Health & Safety Executive. Expected to achieve £700m revenue over
its first 10 years, we have set up the venture and started to generate
increased interest from existing and new commercial clients.
Europe
• Unitymedia - signed a contract to deliver customer management services for
Unitymedia, Germany's second largest broadband and cable provider, worth €61m
(£43.5m) over five years. We would anticipate growth in the contract as we
deliver value.
Other major contracts
• Sheffield City Council - extended our Sheffield City Council contract by 6
years, worth £140m - £170m. Capita will continue to deliver core services
including ICT, revenues, benefits, HR and payroll, and also work in partnership
with the Council to define and deliver projects designed to raise revenue and
generate additional savings over the life of the extended contract.
• Rabobank owned ACCLM - selected to provide debt administration and legacy
banking services in Ireland, worth €55m (£38m) over 5 years.
• We have secured £326m of other contracts of between 3 and 9 years, including
the extension and renewal of relationships with British Gas, the Home Office
and Marks & Spencer.
Major contracts announced to date in 2016
• South Oxfordshire, Vale of White Horse, Hart, Havant and Mendip District
Councils - preferred bidder to provide shared services to five district
councils, worth £139m over nine years. Capita is to introduce an innovative
shared services platform that also has the flexibility to meet the individual
needs of each council, delivering a suite of corporate services including
revenues and benefits, customer services, HR, ICT and procurement.
• Blackburn with Darwen Council - named as preferred bidder to become its
technical services partner, the partnership is expected to be worth at least £
60m for an initial term of five years, with the ability to extend for another
five years. The core of the new contract includes technical services such as
highways and property and includes a wider £2bn framework, which allows a
number of other named public organisations to directly procure Capita's
services for a wide range of infrastructure and development projects.
• We have also secured £52m of other contracts of between 2 and 9 years.
For further details on our contract wins, visit www.capita.co.uk
Bid pipeline
Our bid pipeline shows the total contract value of our major sales bids at a
specific point in time, which we disclose 3 times a year. It contains all bids
with total contracted revenue worth between £25m and a capped ceiling of £1bn,
where we have been shortlisted to the last 4 or fewer. The total contract value
of the bid pipeline currently stands at £4.7bn (February 2015: £5.1bn),
comprised of 37 bids including 89% new business and 11% renewals and
extensions, with a weighted average contract length of 6 years (Feb 2015: 8
years). We are seeing good levels of activity in the private sector (56% of the
pipeline), particularly in telecoms and financial services, and steady activity
in the public sector (44% of the pipeline) in defence, local government,
science and health. Behind the pipeline is a large, active prospect list of
opportunities, a number of which are expected to enter the pipeline shortly. We
have no material contracts, defined as having forecast annual revenue in excess
of 1% of 2015 revenue, up for rebid in 2016. The DWP PIP contract, which is
expected to exceed 1% of group revenue this year, is due for renewal in 2017.
Market review
We operate predominantly in the customer management and business process
management (BPM) markets in the private (53% of revenue) and public (47% of
revenue) sectors in the UK, Ireland and Northern Europe. These are large
addressable markets and there is significant scope for us to increase
penetration of them to drive growth over the medium to long term. Structural
drivers of growth include clients' need to commercialise and maximise the value
of their assets, the transformation and modernisation of services,
digitisation, regulation, competition and other changes in sector dynamics,
which can be catalysts for outsourcing opportunities. We are also increasing
the size of our addressable market over time, as we enter new segments through
new contracts and acquisitions, such as our recent entry into science through
Fera Science Ltd and expansion of customer management into Northern Europe.
We commission market research from Ovum, one of the UK's leading independent
industry analysts. Ovum estimates that Capita's total addressable market for
customer management and BPM services in the UK is £132bn per annum and that the
value of outsourced services was £13.7bn in 2015 (2014: £13.0bn), with 72% in
the private sector and 28% in the public sector. Outsourced customer management
and BPM services growth was 5% last year and is expected to grow at a similar
rate over the medium term. Ovum ranks Capita as the number one provider of
customer management and BPM services in the UK by revenue, with an increased
market share of 28.4% in 2015 (2014: 27%), significantly larger than its
nearest competitors.
In the public sector, we see a number of thematic drivers which should drive
interest in our services and support our growth over the coming years. The
Government is committed to reducing the role of the State, maintaining tight
control of spending, realising more value from asset disposals and driving
better services through technology-enabled change. In health, demand for our
services is increasing as the NHS responds to financial challenges by seeking
administrative savings to fund better services for patients. The local
government finance settlement mandates that local government will be 100%
funded by council tax, business rates and other local revenue by 2020 and
allows authorities to retain 100% of capital receipts from asset sales. Our
skills in business transformation and asset commercialisation can play a key
role in helping to drive revenue growth and efficiencies for our public sector
customers.
Across the private sector, companies continue to face pressure to reduce costs,
improve customer service, better utilise digital technologies and deal with
changes in regulation and competition. This is particularly the case in markets
such as financial services where there are significant opportunities to provide
administration services to both established players and new entrants who are
seeking an operations and technology partner. The vast amount of data generated
by multi-channel engagement means that customer insight and analytics are
becoming more important and we continue to invest in these areas for the
benefit of our clients. In Northern Europe we have an opportunity to shift the
customer management market from buying short term services on a volume basis
from multiple vendors to buying multichannel, digitally focused services from a
single partner on a multiyear basis, with new ways of working that improve
efficiency and customer service.
Acquisitions support our growth strategy
Capita makes acquisitions to build capability in existing markets, enter new
markets and enhance our future organic growth potential, largely focusing upon
small to medium sized businesses. We aim to drive value creation for
shareholders through our acquisition strategy and seek to achieve a 15% post
tax ROCE after integration into the Group. We assess many acquisition
opportunities over the course of a year and, as evidenced by our decision not
to revise our cash offer of 160 pence for each share in Xchanging in late 2015,
remain a disciplined buyer.
In 2015, we invested a total of £402m, excluding deferred and contingent
considerations, in acquiring 17 businesses and setting up our Fera public
sector subsidiary partnership. We also exited a number of small business, which
either lacked strategic fit or had limited growth potential, the largest of
which was National Dental Plan (NDP) which was sold for a cash consideration of
£31.7 million on a cash-free, debt-free basis in September.
Establishing a new growth platform in Europe: having acquired avocis for €210m
(£157m) in February, we subsequently formed Capita Europe, a new division
consisting of avocis, our existing near-shore operation in Poland, tricontes
and Scholand & Beiling. Capita Europe is a leading provider of customer contact
management services in Germany, Switzerland and Austria, serving similar
sectors to Capita's UK-based customer management business, particularly
telecoms, e-commerce and utilities. We are very encouraged by activity and
prospects in this region, with significant opportunities to grow through both
expanding existing relationships and the addition of new clients.
Increasing our IT networking capabilities: in September we acquired Electranet,
a leading supplier for the design, delivery and support of highly secure
network and communication infrastructure in the UK, for a cash consideration of
£37m on a cash/debt free basis. The business runs one of the few commercial
sites that is approved to hold UK government protectively marked information,
allowing it to support secure government projects.
Market leading mortgage administration software: in August, we acquired Vertex
Mortgage Services (Vertex MS), a provider of specialist mortgage administration
software, for £35m on a cash/debt free basis. Coupled with Capita's experience
in business process and customer service transformation, the acquisition
supports our ambition to become the mortgage processing partner of choice for
existing mortgage providers and challenger banks.
Adding critical mass to our real estate business: GL Hearn was acquired in July
for £25m on a cash/debt free basis. An independent UK property consultancy
providing commercial property services to occupiers, developers and investors,
GL Hearn adds critical mass to our real estate business and immediately
enhances our reputation in London. It is well positioned for growth and there
are significant synergies that will be realised on integration into Capita.
Strengthening Capita Learning Services' digital capability: we acquired
Brightwave, a digital learning business specialising in bespoke e-learning and
content creation for large corporate clients, for £7.5m in December. Our
existing digital business will be reversed into Brightwave to form an integral
part of the overall Learning Services proposition, serving clients moving from
face to face to e-learning.
Our Board and people
Today we are announcing that following nearly nine years as Non-Executive
Director and latterly seven as Chairman, Martin Bolland has indicated to the
Board that he intends to stand down by 31 December 2016, or on the earlier
appointment of a successor. Martin has and continues to make an immense
contribution to Capita and has built up and leads a strong Group Board. We are
commencing a search process using external head hunters to identify and appoint
a successor capable of providing the depth of commercial expertise and
excellent leadership that we have received from Martin.
On 17 November 2015 we appointed John Cresswell as an Independent Non-Executive
Director and to the Nomination, Remuneration and Audit and Risk Committees,
taking over as Chair of the Remuneration Committee on 1 December 2015. John
served four and a half years as CEO of Arqiva and previously held a number of
executive director roles on the board of ITV plc.
The Board would like to take this opportunity to thank all our people for their
hard work and dedication which ensures that we can continue to deliver quality
services for clients. Our employees join us through direct recruitment,
contracts or acquisitions and their commitment and enthusiasm play a vital role
in helping us to meet client expectations and sustain our growth.
Summary and future prospects
We delivered good financial results in 2015, including 4% organic revenue
growth, an improvement in our operating margin and high level of cash
generation. Our largest ever acquisition, avocis, has provided a strong growth
platform in Europe. We have re-positioned the business away from certain
non-core lower growth businesses and enter the current year in a strong
strategic and financial position, enabling us to raise our margin target range
to between 13.0% and 14.0%.
In 2016, we are targeting organic revenue growth of at least 4%, driven by the
combination of growth from our divisional businesses and conversion of our bid
pipeline. In the longer term, we remain excited about the significant
structural growth opportunities in our markets and will continue to manage the
business to deliver strong EPS growth, cash flow and return on capital.
1 Excludes non-underlying items detailed in note 2 business exit, note 3
administrative expenses and note 4 net finance costs, in the notes to the
preliminary statement
2 The impact of restating 2014 for business exits and other non-underlying
items as detailed in note 1 segmental information
-Ends-
Consolidated income statement
for the year ended 31 December 2015
2015 2014
Non-underlying Non-underlying
Note Underlying Business Other Total Underlying Business Other Total
£m exit non-underlying £m £m exit £m non-underlying £m
(note 2) (note 3) £m
£m
£m
Continuing
operations:
Revenue 1 4,674.3 162.6 - 4,836.9 4,372.3 5.8 - 4,378.1
Cost of sales (3,367.7 ) (123.8 ) - (3,491.5 ) (3,166.9 ) (4.8 ) - (3,171.7 )
Gross profit 1,306.6 38.8 - 1,345.4 1,205.4 1.0 - 1,206.4
Administrative 2,3 (667.6 ) (176.9 ) (294.3 ) (1,138.8 ) (629.1 ) (8.1 ) (180.3 ) (817.5 )
expenses
Operating 2,3 639.0 (138.1 ) (294.3 ) 206.6 576.3 (7.1 ) (180.3 ) 388.9
profit
Net finance 4 (53.5 ) - (14.7 ) (68.2 ) (40.6 ) - (38.1 ) (78.7 )
costs
Loss on 2 - (26.3 ) - (26.3 ) - (17.8 ) - (17.8 )
business
disposal
Profit before 585.5 (164.4 ) (309.0 ) 112.1 535.7 (24.9 ) (218.4 ) 292.4
tax
Income tax (108.3 ) 2.4 49.4 (56.5 ) (99.1 ) 1.8 44.8 (52.5 )
expense
Profit for the 477.2 (162.0 ) (259.6 ) 55.6 436.6 (23.1 ) (173.6 ) 239.9
year
Attributable
to:
Owners of the 468.4 (162.0 ) (253.7 ) 52.7 429.3 (23.1 ) (170.3 ) 235.9
Company
Non-controlling 8.8 - (5.9 ) 2.9 7.3 - (3.3 ) 4.0
interests
477.2 (162.0 ) (259.6 ) 55.6 436.6 (23.1 ) (173.6 ) 239.9
Earnings per
share
- basic 5 70.73 p (24.46) p (38.31) p 7.96 p 65.15 p (3.51) p (25.85) p 35.79 p
- diluted 5 69.85 p (24.16) p (37.83) p 7.86 p 64.58 p (3.48) p (25.62) p 35.48 p
Consolidated statement of comprehensive income
for the year ended 31 December 2015
2015 2014
£m £m £m £m
Profit for the year 55.6 239.9
Other comprehensive expense:
Items that will not be reclassified subsequently to
profit or loss
Actuarial gain/(loss) on defined benefit pension 13.0 (67.2 )
schemes
Deferred tax effect (6.5 ) 12.8
6.5 (54.4 )
Items that will or may be reclassified subsequently
to profit or loss
Exchange differences of translation of foreign (14.0 ) (6.3 )
operations
Net investment hedge of foreign operations (3.5 ) -
Income tax effect 0.6 -
(2.9 ) 0.0
Gain on cash flow hedges arising during the year 0.8 5.6
Reclassification adjustments for losses included in 3.1 6.0
the income statement
Income tax effect (1.1 ) (2.3 )
2.8 9.3
(14.1 ) 3.0
Other comprehensive expense for the year net of tax (7.6 ) (51.4 )
Total comprehensive income for the year net of tax 48.0 188.5
Attributable to:
Owners of the Company 45.1 184.5
Non-controlling interests 2.9 4.0
48.0 188.5
Consolidated balance sheet
As at 31 December 2015
2015 2014
Note £m £m
Non-current assets
Property, plant and equipment 406.0 448.8
Intangible assets 2,810.0 2,619.4
Financial assets 186.6 178.2
Deferred taxation 18.8 12.5
Trade and other receivables 86.1 73.5
3,507.5 3,332.4
Current assets
Financial assets 44.3 14.7
Disposal group assets held for sale 2 84.1 -
Funds assets 161.7 118.2
Trade and other receivables 1,011.9 988.1
Cash 534.0 458.9
1,836.0 1,579.9
Total assets 5,343.5 4,912.3
Current liabilities
Trade and other payables 1,144.0 1,128.2
Overdrafts 448.7 429.8
Financial liabilities 230.8 164.8
Disposal group liabilities held for sale 2 40.4 -
Funds liabilities 161.7 118.2
Provisions 8 69.4 69.6
Income tax payable 46.2 42.6
2,141.2 1,953.2
Non-current liabilities
Trade and other payables 29.3 28.3
Financial liabilities 2,163.4 1,780.8
Deferred taxation 19.0 -
Provisions 8 49.0 42.0
Employee benefits 188.3 192.5
2,449.0 2,043.6
Total liabilities 4,590.2 3,996.8
Net assets 753.3 915.5
Capital and reserves
Issued share capital 13.8 13.8
Share premium 500.7 499.0
Employee benefit trust and treasury shares (0.3 ) (0.3 )
Capital redemption reserve 1.8 1.8
Foreign currency translation reserve (21.2 ) (4.3 )
Cash flow hedging reserve (12.0 ) (14.8 )
Retained earnings 196.5 354.7
Equity attributable to owners of the Company 679.3 849.9
Non-controlling interests 74.0 65.6
Total equity 753.3 915.5
Consolidated statement of changes in equity
for the year ended 31 December 2015
Share Share Employee Capital Retained Foreign Cash Total Non-controlling Total
capital premium benefit redemption earnings currency flow £m interests equity
£m £m trust reserve £m translation hedging £m £m
& £m reserve £m reserve
treasury £m
shares
£m
At 1 January 2014 13.8 491.2 (0.4 ) 1.8 350.4 2.0 (24.1 ) 834.7 61.6 896.3
Profit for the - - - - 235.9 - - 235.9 4.0 239.9
year
Other - - - - (54.4 ) (6.3 ) 9.3 (51.4 ) - (51.4 )
comprehensive
expense
Total - - - - 181.5 (6.3 ) 9.3 184.5 4.0 188.5
comprehensive
income for the
year
Share based - - - - 11.0 - - 11.0 - 11.0
payment
Deferred income - - - - 5.7 - - 5.7 - 5.7
tax relating to
share
based payments
Shares issued - 7.8 0.1 - - - - 7.9 - 7.9
Equity dividends - - - - (180.5 ) - - (180.5 ) - (180.5 )
paid
Movement in put - - - - (13.4 ) - - (13.4 ) - (13.4 )
options held by
non-controlling
interest
At 1 January 2015 13.8 499.0 (0.3 ) 1.8 354.7 (4.3 ) (14.8 ) 849.9 65.6 915.5
Profit for the - - - - 52.7 - - 52.7 2.9 55.6
year
Other - - - - 6.5 (16.9 ) 2.8 (7.6 ) - (7.6 )
comprehensive
expense
Total - - - - 59.2 (16.9 ) 2.8 45.1 2.9 48.0
comprehensive
income for the
year
Share based - - - - 11.4 - - 11.4 - 11.4
payment
Deferred income - - - - (6.1 ) - - (6.1 ) - (6.1 )
tax relating to
share
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