Rentokil Initial PLC 6-K, filed Jul 27, 2023

Rentokil Initial PLC (RTO)

6-K 2023-07-27 For: 2023-07-27

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Added on April 11, 2026

About this 6-K

Rentokil Initial PLC filed this 6-K on July 27, 2023.

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Financial Results¹	AER			CER
£m	H1 2023 £m	H1 2022 £m	Change %	H1 2023 £m	H1 2022 £m	Change %
Revenue	2,671	1,572	69.9%	2,666	1,613	65.3%
Adjusted EBITDA	602	350	72.0%
Adjusted Operating Profit	437	233	88.0%	434	239	81.7%
Adjusted Profit before Tax	377	226	67.3%	383	229	66.9%
Free Cash Flow	229	151	51.7%
Diluted Adjusted EPS	11.41p	9.45p	20.7%

Statutory Results
Revenue	2,671	1,572	69.9%
Operating Profit	304	170	79.3%
Profit before Tax	240	162	48.1%
EPS	7.35p	6.67p	10.2%
Dividend Per Share	2.75p	2.40p	14.6%

●	Revenue up 65.3%, reflecting the benefit of M&A, including Terminix. Strong Organic Revenue growth of 5.9%, reflecting growth across all regions, and driven by resilient underlying demand and continued effective pricing. Statutory Revenue up 69.9% to £2,671m at AER
	–	Organic Revenue growth of 4.1% in North America, achieved alongside the start of the integration pilot programme and exit of 64 branches; Organic Revenue growth of 4.8% in North America Pest Control services despite lower industry-wide lead flow from residential and termite customers
	–	Organic Revenue up 11.1% in Europe, the Group’s second largest region
		Strong Organic Revenue growth across all business categories: 5.6% in Pest Control; 5.2% in Hygiene and Wellbeing; and 16.3% in France Workwear
●	Adjusted Operating Profit increased 81.7%; 67.3% growth in Adjusted PBT at AER despite a £6m FX headwind. Statutory PBT up 48.1% to £240m at AER
	–	Group Adjusted Operating Margin up 150bps to 16.3%2, with margin expansion in Pest Control and France Workwear partly offset by Hygiene & Wellbeing, impacted in the half by COVID boosted prior year comparators
	–	North America Adjusted Operating Margin up 250bps to 18.5%, underpinned by the delivery of Terminix synergies
	–	Sustained strong price progression across all regions, accompanied by good customer retention
●	Diluted Adjusted EPS up 20.7% to 11.41p
●	Free Cash Flow of £229m due to the timing of interest payments, leading to 83.0% Adjusted Free Cash Flow conversion in H1, as expected. Guidance on Adjusted FCF conversion in FY 23 maintained at 80-90%
●	Effective reduction in leverage with pro forma net debt to Adjusted EBITDA of 2.8x at 30 June 2023 (FY 22: 3.2x). Net debt at £3.27bn (FY 22 £3.30bn)
●	Strong progress on Terminix integration, tracking cost synergy guidance
	–	$37m pre-tax net P&L cost synergies achieved in H1 23, on track to deliver total of $60m year over year in FY 23
	–	Terminix colleague retention up strongly, 3.7ppts to 67.7%
●	Continued excellent momentum in value-creating M&A
	–	24 acquisitions completed in H1 23 for a total consideration of £202m, with total annualised revenues of £79m in the year prior to purchase
	–	Very strong pipeline of high-quality M&A in place. Guidance on targeted spend in FY 23 raised by £50m to c.£300m
●	Declared interim dividend up 14.6% at 2.75p per share, in line with our progressive policy

Investors / Analysts:	Peter Russell	Rentokil Initial plc	+44 (0)7795 166506
Media:	Malcolm Padley	Rentokil Initial plc	+44 (0)7788 978199

	Revenue			Adjusted Operating Profit
	H1 2023 £m	H1 2022 £m	Change %	H1 2023 £m	H1 2022 £m	Change %
North America	1,646	724	127.3%	304	117	163.2%
Pest Control	1,601	679	135.6%	300	111	173.8%
Hygiene & Wellbeing	45	45	0.4%	4	6	(29.9%)

Europe (inc. LATAM)	522	440	18.7%	95	84	12.4%
Pest Control	250	192	30.0%	56	46	21.3%
Hygiene & Wellbeing	166	157	6.2%	21	25	(15.1%)
France Workwear	106	91	16.3%	18	13	34.1%

UK & Sub Saharan Africa	192	179	6.7%	46	46	(1.1%)
Pest Control	98	88	10.4%	26	21	20.1%
Hygiene & Wellbeing	94	91	3.2%	20	25	(19.6%)

Asia & MENAT	173	155	11.9%	24	22	6.4%
Pest Control	128	109	17.4%	18	16	11.2%
Hygiene & Wellbeing	45	46	(1.2%)	6	6	(6.6%)

Pacific	128	110	16.5%	29	24	22.3%
Pest Control	64	49	30.4%	12	8	56.4%
Hygiene & Wellbeing	64	61	5.2%	17	16	6.1%

Central	5	5	(2.1%)	(58)	(49)	(19.3%)
Restructuring costs	–	–	–	(6)	(5)	(24.7%)
Total at CER	2,666	1,613	65.3%	434	239	81.7%
Total at AER	2,671	1,572	69.9%	437	233	88.0%

	Revenue			Adjusted Operating Profit
	H1 2023 £m	H1 2022 £m	Change %	H1 2023 £m	H1 2022 £m	Change %
Pest Control	2,141	1,117	91.5%	412	202	105.1%
Hygiene & Wellbeing	414	400	3.8%	68	78	(12.6%)
France Workwear	106	91	16.3%	18	13	34.1%
Central	5	5	(2.1%)	(58)	(49)	(19.3%)
Restructuring costs	–	–	–	(6)	(5)	(24.7%)
Total at CER	2,666	1,613	65.3%	434	239	81.7%
Total at AER	2,671	1,572	69.9%	437	233	88.0%

	Year over Year P&L Impact
		2023
	Achieved 2022	H1 Actuals	H2 Forecast	FY 2023
Selling, General and Admin Expenses: Sales productivity/Procurement/support functions	$15m	$40m	$38m	$78m
Field Operations: Branch Consolidation/Density Benefits/Productivity	–	$6m	$6m	$12m
Gross Synergies	$15m	$46m	$44m	$90m
Investments: Salary & Benefits HarmonizationSHE & Innovation Centre/IT/Branding/Additional SOX/Audit and Listing Fees	($2m)	($9m)	($21m)	($30m)
Net Synergies	$13m	$37m	$23m	$60m

	H1 23 CER £m	CER Growth	Organic Growth excl Disinfection	Organic Growth incl Disinfection	H1 23 AER £m	AER Growth
Revenue	1,646	127.3%	4.1%	4.1%	1,654	138.4%
Disinfection	–	-80.5%			–	-79.7%
Adjusted Operating Profit	304	163.2%			306	176.0%
Adjusted Operating Margin	18.5%	2.5%			18.5%	2.5%
Operating Profit	209	138.7%			210	150.3%

	H1 23 CER£m	CER Growth	Organic Growth excl Disinfection	Organic Growth incl Disinfection	H1 23 AER £m	AER Growth
Revenue	2,141	91.5%	5.6%	5.6%	2,144	97.7%
Adjusted Operating Profit	412	105.1%			415	112.3%
Adjusted Operating Margin	19.2%	1.3%			19.3%	1.3%
Operating Profit	317	100.5%			322	109.4%

£m at actual exchange rates	Year to Date
£m at actual exchange rates	H1 2023 £m	H1 2022 £m	Change £m
Adjusted Operating Profit	437	233	204
Depreciation	147	114	33
Other	18	3	15
Adjusted EBITDA	602	350	252
One-off and adjusting items in working capital	32	(8)	40
Working capital	(26)	(16)	(10)
Movement on provisions	(26)	1	(27)
Capex – additions	(102)	(83)	(19)
Capex – disposals	2	3	(1)
Capital element of lease payments and initial direct costs incurred	(81)	(45)	(36)
Adjusted Cash Flow	401	202	199
Interest	(114)	(19)	(95)
Tax	(58)	(32)	(26)
Free Cash Flow	229	151	78
Acquisitions	(175)	(127)	(48)
Dividends	(131)	(80)	(51)
Cost of issuing new shares	–	(13)	13
Cash impact of one-off and adjusting items	(78)	(15)	(63)
Other	(1)	–	(1)
Debt related cash flows
Cash outflow on settlement of debt related foreign exchange forward contracts	(3)	1	(4)
Net investment in term deposits	–	(2)	2
Proceeds from new debt	–	1,744	(1,744)
Debt repayments	–	(136)	136
Debt related cash flows	(3)	1,607	(1,610)

Net (decrease)/increase in cash and cash equivalents	(159)	1,523	(1,682)
Cash and cash equivalents at the beginning of the period	879	242	637
Exchange losses on cash and cash equivalents	(22)	23	(45)
Cash and cash equivalents at end of the financial period	698	1,788	(1,090)

Net (decrease)/increase in cash and cash equivalents	(159)	1,523	(1,682)
Debt related cash flows	3	(1,607)	1,610
IFRS 16 liability movement	(7)	1	(8)
Debt acquired	18	(1)	19
Bond interest accrual	35	–	35
Foreign exchange translation and other items	136	(77)	213
Decrease/(increase) in net debt	26	(161)	187
Opening net debt	(3,296)	(1,285)	(2,011)
Closing net debt	(3,270)	(1,446)	(1,824)

				2023 AER
	Amount	Rate	Fixed/Floating	H1£m	H2£m	Total£m
Legacy Bonds
EUR	400	0.950%	Fixed	–	–	–
EUR	500	0.875%	Fixed	–	–	–
EUR	600	0.500%	Fixed	–	–	–
Amortised Cost			Fixed	1	1	2
Swaps		2.85% (avg)	Fixed	14	14	28
Total	1,500			15	15	30
New Bonds
EUR	850	3.875%	Fixed	7	7	14
EUR	600	4.375%	Fixed	11	11	22
GBP	400	5.000%	Fixed	10	10	20
Amortised Cost			Fixed	1	2	3
Swaps		3.53% (avg)	Fixed	7	7	14
Total	1,850			36	37	73
Term Loan
USD	700	4%-6%	50% Fixed	15	15	30

Lease Interest			Float	12	11	23
Other Interest			Float	6	1	7
Total Other				18	12	30

Finance Cost				84	79	163

Interest received				(9)	–	(9)
Hyperinflation				(8)	(12)	(20)
Finance Income				(17)	(12)	(29)

Adjusted Interest				67	67	134

	Revenue			Adjusted Operating Profit
	H1 2023 £m	H1 2022 £m	Change %	H1 2023 £m	H1 2022 £m	Change %
North America	1,654	693	138.4%	306	111	176.0%
Pest Control	1,609	650	147.2%	302	105	187.2%
Hygiene & Wellbeing	45	43	5.1%	4	6	(27.2%)

Europe (inc LATAM)	529	434	22.0%	97	83	16.8%
Pest Control	252	189	33.1%	57	45	26.6%
Hygiene & Wellbeing	169	155	9.3%	22	25	(12.6%)
France Workwear	108	90	20.6%	18	13	39.1%

UK & Sub Saharan Africa	190	179	6.0%	46	46	(1.7%)
Pest Control	97	88	9.5%	26	21	19.2%
Hygiene & Wellbeing	93	91	2.5%	20	25	(20.0%)

Asia & MENAT	168	152	10.9%	23	22	8.0%
Pest Control	123	107	15.3%	18	16	13.1%
Hygiene & Wellbeing	45	45	0.4%	5	6	(5.6%)

Pacific	125	109	14.8%	29	24	20.6%
Pest Control	63	49	28.5%	12	8	54.2%
Hygiene & Wellbeing	62	60	3.7%	17	16	4.6%

Central	5	5	(2.1%)	(58)	(48)	(20.2%)
Restructuring costs				(6)	(5)	(14.5%)
Total at AER	2,671	1,572	69.9%	437	233	88.0%

	Note	6 months to 30 June 2023£m	6 months to 30 June 2022£m
Revenue	4	2,671	1,572
Operating expenses		(2,354)	(1,402)
Net impairment losses on financial assets		(13)	–
Operating profit		304	170
Finance income		17	7
Finance cost		(88)	(20)
Share of profit from associates net of tax		7	5
Profit before income tax		240	162
Income tax expense1	5	(55)	(38)
Profit for the period		185	124
Profit for the period attributable to:
Equity holders of the Company		185	124
Non-controlling interests		–	–
Other comprehensive income:
Items that are not reclassified subsequently to the income statement:
Remeasurement of net defined benefit liability		–	(2)

Items that may be reclassified subsequently to the income statement:
Net exchange adjustments offset in reserves		(341)	214
Net gain/(loss) on net investment hedge		49	(66)
Cost of hedging		17	5
Effective portion of changes in fair value of cash flow hedge		49	(7)
Tax related to items taken to other comprehensive income		2	(3)
Other comprehensive income for the period		(224)	141
Total comprehensive income for the period		(39)	265
Total comprehensive income for the period attributable to:
Equity holders of the Company		(39)	265
Non-controlling interests		–	–

Earnings per share attributable to the Company’s equity holders:
Basic		7.35p	6.67p
Diluted		7.31p	6.65p

	Note	At 30 June 2023 £m	At 31 December 2022 £m
Assets
Non-current assets
Intangible assets		7,101	7,319
Property, plant and equipment		485	495
Right-of-use assets		456	454
Investments in associated undertakings		43	53
Other investments		21	23
Deferred tax assets		46	43
Contract costs		179	182
Retirement benefit assets		6	3
Trade and other receivables		88	90
Derivative financial instruments		45	21
		8,470	8,683
Current assets
Other investments		1	1
Inventories		209	200
Trade and other receivables		859	832
Current tax assets		35	36
Cash and cash equivalents		1,418	2,170
		2,522	3,239
Liabilities
Current liabilities
Trade and other payables		(1,193)	(1,162)
Current tax liabilities		(50)	(60)
Provisions for liabilities and charges		(125)	(133)
Bank and other short-term borrowings		(742)	(1,355)
Lease liabilities		(127)	(135)
		(2,237)	(2,845)
Net current assets		285	394
Non-current liabilities
Other payables1		(76)	(81)
Bank and other long-term borrowings		(3,472)	(3,574)
Lease liabilities		(325)	(332)
Deferred tax liabilities		(503)	(511)
Retirement benefit obligations		(30)	(30)
Provisions for liabilities and charges		(329)	(359)
Derivative financial instruments		(68)	(92)
		(4,803)	(4,979)
Net assets		3,952	4,098
Equity
Capital and reserves attributable to the Company’s equity holders
Share capital		25	25
Share premium		12	9
Other reserves		537	763
Retained earnings		3,379	3,302
		3,953	4,099
Non-controlling interests		(1)	(1)
Total equity		3,952	4,098

	Attributable to equity holders of the Company
	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Non- controlling interests £m	Total equity £m
At 1 January 2022	19	7	(1,927)	3,166	(1)	1,264
Profit for the period	–	–	–	124	–	124
Other comprehensive income:
Net exchange adjustments offset in reserves	–	–	214	–	–	214
Net loss on net investment hedge	–	–	(66)	–	–	(66)
Net loss on cash flow hedge1	–	–	(7)	–	–	(7)
Cost of hedging	–	–	4	–	–	4
Remeasurement of net defined benefit asset	–	–	–	(2)	–	(2)
Tax related to items taken directly to other comprehensive income	–	–	–	(2)	–	(2)
Total comprehensive income for the period	–	–	145	120	–	265
Transactions with owners:
Cost of issuing new shares	–	–	–	(13)	–	(13)
Dividends paid to equity shareholders	–	–	–	(80)	–	(80)
Cost of equity-settled share-based payment plans	–	–	–	5	–	5
Tax related to items taken directly to equity	–	–	–	(4)	–	(4)
Movement in the carrying value of put options	–	–	–	1	–	1
At 30 June 2022	19	7	(1,782)	3,195	(1)	1,438
At 1 January 2023	25	9	763	3,302	(1)	4,098
Profit for the period	–	–	–	185	–	185
Other comprehensive income:
Net exchange adjustments offset in reserves	–	–	(341)	–	–	(341)
Net gain on net investment hedge	–	–	49	–	–	49
Net gain on cash flow hedge1	–	–	49	–	–	49
Cost of hedging	–	–	17	–	–	17
Tax related to items taken directly to other comprehensive income	–	–	–	2	–	2
Total comprehensive income for the period	–	–	(226)	187	–	(39)
Transactions with owners:
Gain on stock options	–	3	–	–	–	3
Dividends paid to equity shareholders	–	–	–	(131)	–	(131)
Cost of equity-settled share-based payment plans	–	–	–	14	–	14
Tax related to items taken directly to equity	–	–	–	4	–	4
Movement in the carrying value of put options	–	–	–	3	–	3
At 30 June 2023	25	12	537	3,379	(1)	3,952

	Capital reduction reserve £m	Merger relief reserve £m	Cash flow hedge reserve £m	Translation reserve£m	Cost of hedging £m	Total £m
At 1 January 2022	(1,723)	–	9	(211)	(2)	(1,927)
Net exchange adjustments offset in reserves	–	–	–	214	–	214
Net loss on net investment hedge	–	–	–	(66)	–	(66)
Net loss on cash flow hedge1	–	–	(7)	–	–	(7)
Cost of hedging	–	–	–	–	4	4
Total comprehensive income for the period	–	–	(7)	148	4	145
At 30 June 2022	(1,723)	–	2	(63)	2	(1,782)
At 1 January 2023	(1,723)	2,998	3	(511)	(4)	763
Net exchange adjustments offset in reserves	–	–	–	(341)	–	(341)
Net gain on net investment hedge	–	–	–	49	–	49
Net gain on cash flow hedge1	–	–	49	–	–	49
Cost of hedging	–	–	–	–	17	17
Total comprehensive income for the period	–	–	49	(292)	17	(226)
At 30 June 2023	(1,723)	2,998	52	(803)	13	537

Principal risk	Summary of risk
Failure to integrate acquisitions and execute disposals from continuing business	The Company has a strategy that includes growth by acquisition, and has acquired 24 businesses in H1 2023. These companies need to be integrated quickly and efficiently to minimise potential impact on the acquired business and the existing business.
Failure to develop products and services that are tailored and relevant to local markets and market conditions	The Company operates across markets that are at different stages in the economic cycle, at varying stages of market development and have different levels of market attractiveness. We must be sufficiently agile to develop and deliver products and services that meet local market needs.
Failure to grow our business profitably in a changing macro-economic environment	The Company’s two core categories (Pest Control and Hygiene & Wellbeing) operate in a global macro-economic environment that is subject to uncertainty and volatility.
Failure to mitigate against financial market risks	Our business is exposed to foreign exchange risk, interest rate risk, liquidity risk, counterparty risk and settlement risk.
Breaches of laws or regulations (including tax, competition and anti-trust laws)	As a responsible company we aim to comply with all laws and regulations that apply to our businesses across the globe.
Failure to ensure business continuity in case of a material incident	The business needs to have resilience to ensure business can continue if impacted by external events, e.g. cyber attack, hurricane or terrorism.
Fraud, financial crime and loss or unintended release of personal data	Collusion between individuals, both internal and external, could result in fraud if internal controls are not in place and working effectively. The business holds personal data on colleagues, some customers and suppliers: unintended loss or release of such data may result in criminal sanctions.
Safety, health and the environment (SHE)	The Company has an obligation to ensure that colleagues, customers and other stakeholders remain safe, that the working environment is not detrimental to health and that we are aware of and minimise any adverse impact on the environment.
Failure to deliver consistently high levels of service to the satisfaction of our customers	Our business model depends on servicing the needs of our customers in line with internal high standards and to levels agreed in contracts.

●	Insurance contracts (for non-insurers) – Introduction of IFRS 17
●	Definition of accounting estimates – Amendments to IAS 8
●	Disclosure of accounting policies – Amendments to IAS 1
●	Deferred tax – Amendments to IAS 12.

●	North America: Puerto Rico joined the Latin America (LATAM) region
●	Europe: Includes Nordics (Norway, Sweden, Finland, Denmark and Poland), previously in UK & Rest of World region. Also continues to include LATAM¹ which has been expanded to include Caribbean (formerly in UK & Rest of World) and Puerto Rico (formerly in North America)
●	UK & Sub-Saharan Africa: No change to UK, Ireland & Baltics. Sub-Saharan Africa remained in this region. Other Rest of World countries (MENAT and Caribbean) moved to other regions
●	Asia & MENAT: Enlarged region includes Asia and MENAT countries
●	Pacific: No change

	Organic Revenue growth excluding disinfection		Organic Revenue growth including disinfection
	30 June 2023 %	30 June 2022 %	30 June 2023 %	30 June 2022 %
North America	4.1	5.7	4.1	1.0
Europe (incl LATAM)	11.1	9.5	9.8	5.0
UK & Sub-Saharan Africa	3.9	5.9	3.9	3.2
Asia & MENAT	11.3	8.0	6.5	5.4
Pacific	7.4	5.3	7.3	4.8
Group	5.9	6.2	5.4	2.0

Pest Control	5.6	5.1	5.6	5.1
Hygiene & Wellbeing	5.2	10.1	1.8	(12.2)
France Workwear	16.3	15.5	16.3	15.5
Group	5.9	6.2	5.4	2.0

	Note	6 months to30 June2023 £m	6 months to 30 June 2022 £m
Cash flows from operating activities
Cash generated from operating activities	12	504	312
Interest received		8	2
Interest paid1		(122)	(21)
Income tax paid		(58)	(32)
Net cash flows from operating activities		332	261
Cash flows from investing activities
Purchase of property, plant and equipment		(81)	(68)
Purchase of intangible fixed assets		(21)	(15)
Proceeds from sale of property, plant and equipment		2	3
Acquisition of companies and businesses, net of cash acquired		(175)	(127)
Net change to cash flow from investment in term deposits		–	(2)
Net cash flows from investing activities		(275)	(209)
Cash flows from financing activities
Dividends paid to equity shareholders		(131)	(80)
Capital element of lease payments		(82)	(45)
Cost of issuing new shares		–	(13)
Cash (outflow)/inflow on settlement of debt-related foreign exchange forward contracts		(3)	1
Proceeds from new debt		–	1,744
Debt repayments		–	(136)
Net cash flows from financing activities		(216)	1,471
Net (decrease)/increase in cash and cash equivalents		(159)	1,523
Cash and cash equivalents at beginning of period		879	242
Exchange (loss)/gain on cash and cash equivalents		(22)	23
Cash and cash equivalents at end of the financial period		698	1,788

●	amortisation and impairment of intangible assets (excluding computer software);
●	one-off and adjusting items; and
●	net interest adjustments.

	Revenue 30 June 2023 £m	Revenue¹ 30 June 2022 £m	Operating profit 30 June 2023 £m	Operating profit¹ 30 June 2022 £m
North America
Pest Control	1,609	650	302	105
Hygiene & Wellbeing	45	43	4	6
	1,654	693	306	111
Europe (incl LATAM)
Pest Control	252	189	57	45
Hygiene & Wellbeing	169	155	22	25
France Workwear	108	90	18	13
	529	434	97	83
UK & Sub-Saharan Africa
Pest Control	97	88	26	21
Hygiene & Wellbeing	93	91	20	25
	190	179	46	46
Asia & MENAT
Pest Control	123	107	18	16
Hygiene & Wellbeing	45	45	5	6
	168	152	23	22
Pacific
Pest Control	63	49	12	8
Hygiene & Wellbeing	62	60	17	16
	125	109	29	24
Central and regional overheads	5	5	(58)	(48)
Restructuring costs	–	–	(6)	(5)
Revenue and Adjusted Operating Profit	2,671	1,572	437	233
Adjusted Operating Profit Margin			16.4%	14.8%
One-off and adjusting items			(46)	(23)
Amortisation and impairment of intangible assets2			(87)	(40)
Operating Profit			304	170
Operating Profit Margin			11.4%	10.8%
Share of profit from associates (net of tax)			7	5
Adjusted interest			(67)	(12)
Net interest adjustments			(4)	(1)
Profit Before Tax			240	162
Net interest adjustments			4	1
One-off and adjusting items			46	23
Amortisation and impairment of intangible assets1			87	40
Adjusted Profit Before Tax			377	226

	Revenue 30 June 2023 £m	Revenue 30 June 2022 £m
Recognised over time
Contract service revenue	1,918	1,110
Recognised at a point in time
Job work	541	289
Sales of goods	212	173
Total	2,671	1,572

	Amortisation and impairment of intangibles1 30 June 2023 £m	Amortisation and impairment of intangibles1 30 June 2022 £m
North America	58	20
Europe (incl. LATAM)	13	7
UK & Sub-Saharan Africa	4	4
Asia & MENAT	5	5
Pacific	3	2
Central and regional	4	2
Total	87	40

	6 months to 30 June 2023 £m	6 months to 30 June 2022 £m
UK corporation tax at 23.5% (2022: 19.0%; 2021: 19.0%)	2	9
Overseas taxation	44	40
Adjustment in respect of previous periods	(2)	(2)
Total current tax	44	47
Deferred tax expense/(credit)	13	(9)
Deferred tax adjustment from change in tax rates	–	–
Adjustment in respect of previous periods	(2)	–
Total deferred tax	11	(9)
Total income tax expense	55	38

	6 months to 30 June 2023 £m	6 months to 30 June 2022 £m
At 1 January	(468)	(67)
Exchange differences	24	(7)
Acquisition of companies and businesses	(7)	(16)
(Charged)/credited to the income statement	(11)	10
Credited to other comprehensive income	1	–
Credited/(charged) to equity	4	(4)
At 30 June	(457)	(84)
Deferred taxation has been presented on the balance sheet as follows:
Deferred tax asset within non-current assets	46	44
Deferred tax liability within non-current liabilities	(503)	(128)
	(457)	(84)

	6 months to 30 June 2023 AER £m	6 months to 30 June 2022 AER/CER £m
Unadjusted income tax expense	54	38
Tax adjustments on:
Amortisation and impairment of intangible assets (excluding computer software)	21	10
One-off and adjusting items – operating	12	1
Net interest adjustments	1	–
Adjusted income tax expense (a)	88	49
Adjusted profit before tax (b)	377	226
Adjusted effective tax rate (a/b)	23.4%	21.8%

	6 months to 30 June 2023 £m	6 months to 30 June 2022 £m
2021 final dividend paid – 4.30p per share	–	80
2022 final dividend paid – 5.15p per share	131	–
Total	131	80

	6 months to 30 June 2023 £m	6 months to 30 June 2022 £m
Purchase consideration
– Cash paid	161	116
– Deferred and contingent consideration	41	44
Total purchase consideration	202	160
Fair value of net assets acquired	58	73
Goodwill from current-period acquisitions	144	87

	At 30 June 2023 £m	At 31 December 2022 £m
Current
Cash and cash equivalents in the Consolidated Balance Sheet	1,418	2,170
Other investments	1	1
Bank and other short-term borrowings¹	(742)	(1,355)
Lease liabilities	(127)	(135)
	550	681
Non-current
Fair value of debt-related derivatives	(23)	(71)
Bank and other long-term borrowings²	(3,472)	(3,574)
Lease liabilities	(325)	(332)
	(3,820)	(3,977)
Total net debt	(3,270)	(3,296)

Level 1 –	unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 –	inputs other than quoted prices that are observable for the asset or liability either directly as prices or indirectly through modelling based on prices; and
Level 3 –	inputs for the asset or liability that are not based on observable market data.

Financial instrument	Hierarchy level	Valuation method
Financial assets traded in active markets	1	Current bid price
Financial liabilities traded in active markets	1	Current ask price
Listed bonds	1	Quoted market prices
Money market funds	1	Quoted market prices
Interest rate/currency swaps	2	Discounted cash flow based on market swap rates
Forward foreign exchange contracts	2	Forward exchange market rates
Borrowings not traded in active markets (term loans and uncommitted facilities)	2	Nominal value
Money market deposits	2	Nominal value
Trade payables and receivables	2	Nominal value less estimated credit adjustments
Contingent consideration (including put option liability)	3	Discounted cash flow using WACC

	Fair value assets 30 June 2023 £m	Fair value assets 31 December 2022 £m	Fair value liabilities 30 June 2023 £m	Fair value liabilities 31 December 2022 £m
Interest rate swaps (level 2):
– non-hedge	–	–	(1)	–
– cash flow hedge	47	36	(11)	(2)
– net investment hedge	15	15	(73)	(120)
	62	51	(85)	(122)
Analysed as follows:
Current portion	–	–	–	–
Non-current portion	62	51	(85)	(122)
Derivative financial instruments	62	51	(85)	(122)
Contingent consideration¹ (level 3)	–	–	(83)	(70)
Analysed as follows:
Current portion	–	–	(49)	(32)
Non-current portion	–	–	(34)	(38)
Other payables (non-current)	–	–	(83)	(70)

	Contingent consideration 30 June 2023 £m	Contingent consideration 30 June 2022 £m
At 1 January	70	75
Exchange differences	(2)	2
Acquisitions	33	27
Payments	(15)	(13)
Revaluation of put option through equity	(3)	(1)
	83	90

	Facility amount at 30 June 2023 £m	Drawn at period end at 30 June 2023 £m	Headroom at 30 June 2023 £m	Interest rate at period end at 30 June 2023 %
Non-current
$700m term loan due October 2025	551	551	–	5.9
$1.0bn RCF due October 2027	787	–	787	0.14

	Facility amount at 31 December 2022 £m	Drawn at period end at 31 December 2022 £m	Headroom at 31 December 2022 £m	Interest rate at period end at 31 December 2022 %
Non-current
$700m term loan due October 2025	579	579	–	4.9
$1.0bn RCF due October 2027	827	–	827	0.14

	Bond interest coupon 2023	Effective hedged interest rate 2023
Non-current
€400m bond due November 2024	Fixed 0.950%	Fixed 3.62%
€500m bond due May 2026	Fixed 0.875%	Fixed 2.82%
€850m bond due June 2027	Fixed 3.875%	Fixed 5.06%
€600m bond due October 2028	Fixed 0.500%	Fixed 2.25%
€600m bond due June 2030	Fixed 4.375%	Fixed 4.56%
£400m bond due June 2032	Fixed 5.000%	Fixed 5.20%
Average cost of bond debt at period-end rates		4.00%

	2023£m	2022£m
Operating profit	304	170
Adjustments for:
– Depreciation and impairment of property, plant and equipment	75	65
– Depreciation and impairment of leased assets	60	40
– Amortisation and impairment of intangible assets (excluding computer software)	87	40
– Amortisation and impairment of computer software	12	9
– Other non-cash items	18	3
Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation):
– Inventories	(15)	(22)
– Contract costs	(5)	(3)
– Trade and other receivables	(64)	(57)
– Accrued income	9	7
– Trade and other payables and provisions	3	47
– Contract liabilities	20	13
Cash generated from operating activities	504	312

Purchase of property, plant and equipment	(81)	(68)
Purchase of intangible fixed assets	(21)	(15)
Capital element of lease payments and initial direct costs incurred	(81)	(45)
Proceeds from sale of property, plant and equipment	2	3
Cash impact of one-off and adjusting items	78	15
Adjusted Cash Flow	401	202
Interest received	8	2
Interest paid	(122)	(21)
Income tax paid	(58)	(32)
Free Cash Flow	229	151

	2023 AER £m	2022 AER £m
Net cash from operating activities	332	261
Purchase of property, plant, equipment and intangible fixed assets	(102)	(83)
Capital element of lease payments and initial direct costs incurred	(81)	(45)
Proceeds from sale of property, plant, equipment and software	2	3
Cash impact of one-off and adjusting items	78	15
Dividends received from associates	–	–
Free Cash Flow	229	151