28 February 2014 – annual results/acquisition
The international support services and construction group has announced excellent results for 2013 with adjusted pre-tax profits, earnings per share and the dividend coming in ahead of expectations. Revenues at the group were 12% higher at £2.19bn, with adjusted pre-tax profits almost 8% higher at £81.1m and earnings per share over 5% higher at 47.7p. The full year dividend was also 5% higher at 21.5p. The group ended the year with net debt of £38.6m compared with net cash of £25.8m a year earlier, as a result of spending £49m on acquisitions and additional spending on capex. Given the challenging trading conditions in many of its markets these were good results and the group has also made good strategic progress. The group won £2.5bn of new business during the year for clients including the MoD, BBC, Jaguar Land Rover and the Lusail Tower in Qatar, maintaining the order book at £6.4bn. Indeed, 75% of consensus revenues for 2014 have already been secured.
The group has also announced the acquisition of Initial Facilities from Rentokil Initial for £250m, to be funded by debt and a share placing of 12.9m shares at 580p. The balance of the consideration will be funded by new bank facilities, but the acquisition is expected to be earnings enhancing in its first year. This has gone down well with the market and we re-iterate our recommendation of BUY.