MITIE Group PLC · LSE:MTO
MITIE — H1 FY23 Earnings Presentation
21 slides from MITIE's earnings presentation, Nov 17, 2022
Slide 1: Mitie Group plc Half Year Results Presentation
Mitie Group plc The UK’s Leading Facilities Management Company Half year Results “Encouraging sales momentum and effective management of inflation in Presentation H1; increased interim dividend; increase to FY23 guidance” 17 November 2022 THE EXCEPTIONAL, EVERY DAY 1
Slide 2: H1 FY23: Encouraging sales momentum in H1 with contract wins and pricing
H1 FY23: Encouraging sales momentum in H1 with contract wins and pricing. Increase to FY23 guidance • H1 revenue of £1,923m as new contract wins, acquisitions and pricing replace revenue from short-term COVID-related contracts • H1 operating profit of £68.0m (margin of 3.5%) underpinned by trading,
Slide 3: Financial update
Financial update Simon Kirkpatrick Chief Financial Officer
Slide 4: Headline P&L: Strong underlying revenue growth and savings delivery drives improved performance
Headline P&L: Strong underlying revenue growth and savings delivery drives improved performance Headlines (£m) H1 FY23 H1 FY22 Change % • Contract wins, pricing and acquisitions Revenue1 1,923 1,912 +1 replace short-term COVID-related work Revenue ex. COVID contracts 1,910 1,653 +16 • Good underlyin
Slide 5: Excluding Covid contracts, all divisions contribute to 15.5% growth in Group revenue
Excluding Covid contracts, all divisions contribute to 15.5% growth in Group revenue Revenue (£m) H1 FY23 H1 FY22 Change % • Business Services: excluding Covid contracts, underlying growth of 9% from Business Services 592 775 (24) wins and pricing Technical Services 526 445 +18 • Technical Services
Slide 6: New contract wins, project work, pricing and acquisitions replace COVID-related revenues
New contract wins, project work, pricing and acquisitions replace COVID-related revenues… £m Organic growth 8.3% NB: Revenue from continuing operations. Percentage movements are calculated based on £1.9bn for COVID contracts, and £1.6bn (i.e. revenue excluding COVID contracts) for the other bridging
Slide 7: Cost savings improve underlying profitability across all divisions
… which combine with cost savings to improve underlying profitability across all divisions Operating profit (£m) H1 FY23 H1 FY22 Change % • Business Services underlying profit growth of 24% as a result of new wins and cost savings Business Services 32.9 65.2 (50) • Technical Services: headwinds from
Slide 8: Operating profit: Excluding COVID contracts, 24% improvement from wins, project work and cost savings
Operating profit: Excluding COVID contracts, 24% improvement from wins, project work and cost savings, underpinned by effective inflation management £m NB: Before other items from continuing operations 8
Slide 9: Effective management of inflation in H1 leads us to revise our FY guidance
Effective management of inflation in H1 leads us to revise our FY guidance on the expected impact – mitigating cost savings are well progressed H1 FY23 cost inflation impact vs H1 FY22 H1 FY23 inflation Labour cost £(45)m Non-labour cost £(40)m Wage & procurement cost inflation at c.5% is Total cost
Slide 10: Increase in net debt as a result of planned shareholder returns and working capital outflow
Increase in net debt as a result of planned shareholder returns, and an expected working capital outflow Cash flow (£m) H1 FY23 H1 FY22 Operating profit before other items 1 68.0 85.3 • Strong cash flow from profits despite ending of higher margin COVID-related work Add back: depreciation, amortisat
Slide 11: TFO now comprises only net debt, following cessation of off balance sheet financing
TFO now comprises only net debt, following the cessation of ‘off balance sheet’ financing £m H1 FY22 H1 Total Financial Obligations2 FY23 FY22 Closing net (debt) / cash (64) 27 9 Average daily net (debt) (62) (25) (60) Leverage ratio (average daily 0.1x 0.1x 0.2x net debt / EBITDA)1 Debtor days 30 2
Slide 12: Financial summary: Strong financial performance in H1 positions Mitie for improved FY23 profitability
Financial summary: Strong financial performance in H1 positions Mitie for improved FY profitability FY23 outlook • Average net debt will increase; FY free cashflow expectations are unchanged • Mid-single digit revenue growth, excluding Covid contracts and inflation • Inflation will continue to be we
Slide 13: Strategic update
Strategic update Phil Bentley Chief Executive
Slide 14: We are making good progress against our four strategic drivers
We are making good progress against our four strategic drivers Accelerate growth Enhance margins Generate cash Capability enablers • New wins • ISV synergies • Improved profitability • “Science of Service” • Retention • Operational excellence • Working capital • “Great Place to Work” • Upsell/cross
Slide 15: Accelerate growth: Good organic and acquisition growth plus increased pipeline
Accelerate growth: Good organic and acquisition growth plus increased pipeline £382m TCV new contract wins1 £1.1bn TCV contract retentions/extensions1 100 1,000 • H1 FY23 new wins add £111m of new • 93% renewal/extension rate Renewal rate % 800 revenue in FY23 90 600 FDIS • Wins from Birmingham Airp
Slide 16: Enhance margins: £17.2m delivered in H1 FY23, despite some project delays
Enhance margins: £17.2m delivered in H1 FY23, despite some project delays On track to deliver cost savings in FY23 Delays in FY23 delivery: delivery in FY24 Operational Digital Supplier Communities Interserve synergies Overhead savings Forté Excellence Platform contract turnaround Cost synergies On
Slide 17: We are making good progress against our four strategic drivers
We are making good progress against our four strategic drivers Accelerate growth Enhance margins Generate cash Capability enablers • New wins • ISV synergies • Improved profitability • “Science of Service” • Retention • Operational excellence • Working capital • “Great Place to Work” • Upsell/cross
Slide 18: Capability enablers: Creating a Great Place to Work with our new Employee Value Proposition
Capability enablers: Creating a “Great Place to Work” with our new Employee Value Proposition (EVP) and Winter Support package Employee Value Proposition £10m Winter Support package launched Where me and Mitie come together - Cycle to work Together we will thrive - £50 MiDeals voucher Where we can s
Slide 19: Capability enablers: Decarbonisation Delivered
Capability enablers: “Decarbonisation Delivered” Solar PV • Acquired Custom Solar, a leading commercial Solar PV Installer • 5-year framework agreement with Morrisons providing end-to- end solution for 98MW portfolio across 260 sites • Won Solar & Storage Live Award 2022 for ‘Commercial Solar Projec
Slide 20: Summary: Better than expected first half; increasing FY23 guidance
Summary: Better than expected first half; increasing FY23 guidance • Encouraging momentum in the first half of the year from contract wins, acquisitions and pricing • Margin enhancement initiatives generate greater savings in H2 • Strong balance sheet with low leverage and long term debt • Interim d
Slide 21: Mitie Group plc Half Year Results Presentation
Mitie Group plc The UK’s Leading Facilities Management Company Half Year Results Presentation 17 November 2022