MITIE Group PLC · LSE:MTO
MITIE — H1 2014 Earnings Presentation
52 slides from MITIE's earnings presentation, Nov 18, 2013
Slide 1: Half-year results presentation for the six months to September 2013
MITIE Group PLC Half-year results presentation for the six months to September 2013 18 November 2013
Slide 2: Ruby McGregor-Smith CBE, Chief Executive
Chief Executive Ruby McGregor-Smith CBE
Slide 3: Overview
Overview +10.5% (5.1% organic growth) 116.3% Headline revenue Cash conversion (106.7% headline) £1,044.6m (2012: £945.0m) (2012: 84.6%) +13.3% +6.5% Headline operating profit Dividend per share £62.3m (2012: £55.0m) 4.9p (2012: 4.6p) 6.0% 99% Headline operating profit margin 2014 budgeted revenue se
Slide 4: Highlights
Highlights Excellent progress through a focus on key growth markets • Delivered 5.1% organic growth this period and margins of 6.0% • Exit from our cyclical M&E engineering contracting business to be substantially complete by financial year end Sector-leading facilities management proposition drivin
Slide 5: The shape of our business
The shape of our business Facilities Healthcare Management £45m Integrated FM: £314m Security: £110m Cleaning & environmental: £155m Engineering maintenance: £155m Catering & front of house: £87m TOTAL: £821m Energy Property Solutions Management £13m Social housing: £106m Niche services: £59m TOTAL:
Slide 6: Focus on higher margin, growth markets
Focus on higher margin, growth markets Long-term organic Acquisition Division Strategy growth opportunity potential • Remain the UK’s market leader in integrated FM and continue to grow in this market with existing No acquisitions of scale Facilities clients 5-10% required – niche/bolt-on Management
Slide 7: Facilities Management – strong organic growth
Facilities Management – strong organic growth • Strong performance across the division, generating 10.1% organic revenue growth, driven largely by the integrated FM portfolio • Growth continues to come predominantly from private sector • In the public sector we remain focused on opportunities in jus
Slide 8: Integrated FM offering remains sector leading
Integrated FM offering remains sector leading • Our unique self-delivery capability enables us to offer value to our clients across single, bundled and integrated FM propositions • Our IFM proposition continues to differentiate us and drive strong organic growth • Excellent client relationships are
Slide 9: Good flow of contract awards in the first half
Good flow of contract awards in the first half • Bank of Ireland • Five year contract, £-multi million • Facilities management delivered at sites across Republic of Ireland, Northern Ireland and Great Britain • Leading UK provider of care and nursing homes • £50m contract over five years • Deliverin
Slide 10: Successfully diversifying our security offering
Successfully diversifying our security offering • Our Total Security Management business has had a positive first half, delivering a return on our investment in people and technology services • New contracts awarded include: • Major online retailer – new contract to deliver total security management
Slide 11: Select international FM opportunities
Select international FM opportunities • Focused on meeting the needs of key existing clients internationally • 3% revenues international • Continue to partner on selective overseas work and assess acquisition opportunities in appropriate territories • Successfully mobilised our contract with an inte
Slide 12: Property Management
Property Management • Solid first half performance in a market showing significant signs of improvement, particularly in social housing • Some significant contract gains will result in an improved second half • Key player in all of our major markets • Social housing – #3 • Painting – #1 • Roofing –
Slide 13: Healthcare
Healthcare • Successful integration of Enara and re-brand to MiHomecare • Anticipate significant future opportunities in this market • Potential for niche acquisitions to add capability • Fourth largest provider in the UK homecare market • Encouraging progress with the award of several significant c
Slide 14: Energy Solutions
Energy Solutions • Helps clients to buy, use and generate energy more cost-efficiently • Purchase one-third of industrial and commercial energy spend in the UK on behalf of clients • £2.3bn energy spend under management • Focused on consulting contracts with a large independent client base as well a
Slide 15: Investing for growth
Investing for growth • Acquired UK CRBs on 14 August 2013 • One of the largest providers of online criminal records checking service in the UK – conducts over 50,000 checks per annum • Provides a scalable platform to compete in the growing screening and vetting market • Invested £1.2m in two new MIT
Slide 16: Secured revenue continues to increase
Secured revenue continues to increase 100% 99.0% 97.0% 98.0% 95.0% 93.0% 90% 80% 74.0% 72.0% 70% 68.0% 62.0% 60% 58.0% 50% 2010 2011 2012 2013 2014 Secured Revenue - Current Year Secured Revenue - Next Year 16
Slide 17: Revenue by sector
Revenue by sector Finance and 17% 5% Central government professional services 7% Local government Retail 13% 3% Other government Manufacturing 10% Transport and 7% 10% Social housing logistics 5% Health Technology and 6% communications 5% Education Utilities 4% Leisure 4% Property 3% management Cons
Slide 18: Revenue by contract type
Revenue by contract type % of total revenue 45 40 35 30 25 people + passion Single Bundled mFull year ended March 2013 a Half year ended September 2013 Integrated 18 | MAPANTIE
Slide 19: Order book remains strong
Order book remains strong £10bn £8bn £9.0bn £9.2bn £8.6bn £8.7bn £6bn £6.8bn £6.4bn £4bn FY 2010 FY 2011 FY 2012 HY 2013 FY 2013 HY 2014 19
Slide 20: Sales pipeline of £8.8 billion
Sales pipeline of £8.8 billion Finance and 10% 9% Central government professional services 14% Local government Retail 6% 23% Social housing Property 7% management 8% Health Manufacturing 5% 3% Education Transport and 7% logistics Construction 3% Technology and 1% communications Leisure 2% Utilities
Slide 21: Suzanne Baxter, Finance Director
Finance Director Suzanne Baxter
Slide 22: Headline financial results - strong headline performance
Headline financial results - strong headline performance 2014 H1 2013 H1 Growth Headline revenue £1,044.6m £945.0m 10.5% Headline operating profit £62.3m £55.0m 13.3% Headline operating profit margin 6.0% 5.8% 0.2pp Headline basic EPS 11.8pps 10.8pps 9.3% Dividend 4.9pps 4.6pps 6.5% H1 2013 and YE 2
Slide 23: Revenue bridge
Revenue bridge £1100m 5.4% £1000m 5.1% £1,045m £945m £900m 2013 H1 Organic growth Acquisitions 2014 H1 23
Slide 24: Segmental revenue – growth led by FM division
Segmental revenue – growth led by FM division Organic 2014 H1 2013 H1* Growth growth Facilities Management £821.2m £744.4m 10.3% 10.1% Property Management £165.2m £173.1m (4.6%) (4.6%) Healthcare £44.9m n/a n/a n/a Energy Solutions £13.3m £27.5m (51.6%) (51.6%) Headline revenue £1,044.6m £945.0m 10.
Slide 25: Facilities Management – double digit growth
Facilities Management – double digit growth 2014 H1 2013 H1 Growth Headline revenue £821.2m £744.4m 10.3% Organic growth 10.1% 7.5% 2.6pp Headline operating profit £49.7m £45.2m 10.0% Headline operating profit margin 6.1% 6.1% - Forward order book £7.2bn £7.5bn (4.0%) % of MITIE Group headline reven
Slide 26: Property Management – margins maintained, return to growth expected in H2
Property Management – margins maintained, return to growth expected in H2 2014 H1 2013 H1 Growth Headline revenue £165.2m £173.1m (4.6%) Organic growth (4.6%) 10.5% (15.1pp) Headline operating profit £9.9m £10.4m (4.8%) Headline operating profit margin 6.0% 6.0% – Forward order book £1.0bn £1.1bn (9
Slide 27: Healthcare – first full year in line with acquisition expectations
Healthcare – first full year in line with acquisition expectations Reported post Acquisition 2014 H1 acquisition announcement Headline revenue £44.9m £87.9m £93.0m Headline operating profit £5.6m £11.3m £10.1m Headline operating profit margin 12.5% 12.9% 10.9% Forward order book £0.3bn n/a n/a % of
Slide 28: Energy Solutions – moving towards consultancy model
Energy Solutions – moving towards consultancy model 2014 H1 2013 H1 Growth Headline revenue £13.3m £27.5m (51.6%) Organic growth % (51.6%) (34.6%) (17.0pp) Headline operating profit (£2.9m) (£0.6m) 383% Headline operating profit margin (21.8%) (2.2%) (19.6pp) Forward order book £0.2bn £0.2bn – % of
Slide 29: Operating profit – margins improved
Operating profit – margins improved £65m £60m 8.8% 4.5% £62.3m £55m £55.0m £50m 2013 H1 Organic growth Acquisitions 2014 H1 Operating profit margin % 5.8% 6.0% 29
Slide 30: Finance costs – increased due to funding of Enara acquisition
Finance costs – increased due to funding of Enara acquisition 2014 H1 2013 H1 Movement Investment revenue £0.7m £0.4m £0.3m Finance costs (£7.7m) (£4.9m) (£2.8m) Net finance costs (£7.0m) (£4.5m) (£2.5m) EBITDA Interest Cover 9.4x 12.8x (3.4x) 30
Slide 31: Other items – integration of Enara in line with expectations
Other items – integration of Enara in line with expectations at acquisition 2014 H1 2013 H1 Movement Revenue of businesses being exited £41.2m £81.6m (£40.4m) Trading losses of businesses being exited £4.3m £2.8m £1.5m Restructuring costs – £4.8m (£4.8m) Integration costs £2.5m £0.2m £2.3m Acquisiti
Slide 32: Headline EPS – continued growth, 4 year CAGR 6.4%
Headline EPS – continued growth, 4 year CAGR 6.4% 22.6pps 22.8pps 23.1pps 19.5pps 10.8pps 11.8pps 9.9pps 10.4pps 9.2pps 2010 2011 2012 2013 2014 HY FY 32
Slide 33: Dividend per share - year on year growth, 4 year CAGR 7.3%
Dividend per share - year on year growth, 4 year CAGR 7.3% 10.3pps 9.6pps 9.0pps 7.8pps 4.4pps 4.6pps 4.9pps 3.7pps 4.1pps 2010 2011 2012 2013 2014 HY FY 33
Slide 34: Excellent rolling 12 month cash conversion
Excellent rolling 12 month cash conversion 150% 127.8% 100% 95.2% 86.7% 84.7% 116.3% 50% 90.8% 91.0% 84.6% 81.0% 0% 2010 2011 2012 2013 2014 HY FY 34
Slide 35: Working capital
Working capital 2014 H1 2013 H1 2013 FY Inventories £6.9m £6.9m £6.7m Trade and other receivables £510.4m £536.0m £507.4m £517.3m £542.9m £514.1m Trade and other payables (£477.8m) (£467.1m) (£500.7m) Provisions (£1.4m) (£0.5m) (£1.4m) Working capital £38.1m £75.3m £12.0m Net cash inflow/(outflow) (
Slide 36: Net debt bridge
Net debt bridge £250m £3m £21m £200m £10m £7m £7m £2m £221.8m £150m £192.2m £100m 2013 FY Free cash Acquisitions Share Purchase of Dividends Other 2014 H1 flow buybacks own shares financing & investing 36
Slide 37: Use of cash – positive free cash flow of £7.3m in H1
Use of cash – positive free cash flow of £7.3m in H1 Working capital outflow of £41.0m to support Growth � growth of 10.5% in H1 Capex levels reduced due to the introduction of lease financing for commercial fleet, with Capex � £8.4m spend in H1, which is <1% of revenue (2012: £15.5m, 1.5% of reve
Slide 38: Total cash returned to shareholders
Total cash returned to shareholders £m 60 £52.4m 50 £7.4m £41.5m 40 £37.9m £34.6m £12.4m £6.6m £29.2m £5.7m £10.0m 30 £4.5m £16.6m £15.5m £7.4m 20 £14.4m £13.1m 10 £18.3m £20.5m £14.5m £17.1m £11.6m 0 2010 2011 2012 2013 2014 H1 Dividends H1 Dividends H2 Share buybacks Purchase of own shares 38
Slide 39: Continuing track record of sustainable, profitable growth
Continuing track record of sustainable, profitable growth Headline Revenue Headline Operating Profit £120m £1,981m £113m £1,891m £108m £1,826m £1,720m £93m £972m £1,045m £55m £62m £801m £919m £945m £48m £52m £43m 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Headline EPS Dividend per share 22.6p
Slide 40: Ruby McGregor-Smith, Chief Executive
Chief Executive Ruby McGregor-Smith
Slide 41: Highlights
Highlights Excellent progress through a focus on key growth markets • Delivered 5.1% organic growth this period and margins of 6.0% • Exit from our cyclical M&E engineering contracting business to be substantially complete by financial year end Sector-leading facilities management proposition drivin
Slide 42: Outlook
Outlook • Diversified portfolio with high quality blue chip client base • Core exposure is to growth markets and we are well-positioned to increase market share, deliver organic growth and improve margins • Market-leading integrated FM capabilities • Comprehensive energy proposition will enhance mar
Slide 43: Appendices
Appendices people + passion MIATIE
Slide 44: Restatement of prior periods
Restatement of prior periods 30 September 2012 31 March 2013 Re- As originally presentation IAS 19 As originally IAS 19 As restated As restated reported for businesses Amendments reported Amendments being exited Headline revenue £1,026.6m (£81.6m) - £945.0m £1,980.6m - £1,980.6m Headline profit befo
Slide 45: Balance sheet
Balance sheet £m 2014 H1 2013 H1 Growth Goodwill and other intangible assets 535.0 416.7 28.4% Other non-current assets* 124.5 105.9 17.6% Current assets* 517.3 542.9 (4.7%) Current liabilities* (494.2) (479.4) 3.1% Non-current liabilities* (51.6) (39.9) 29.3% Net debt (221.8) (132.9) 66.9% Net asse
Slide 46: Cashflow
Cashflow 2014 H1 2013 H1** Growth Opening net debt (£192.2m) (£106.9m) 79.8% Operating cash flows £70.1m £61.0m 14.9% Movement in working capital (£41.0m) (£29.9m) 37.1% Cash generated by operations £29.1m £31.1m (6.4%) Tax, interest and other operating items (£13.5m) (£17.7m) (23.7%) Acquisitions (
Slide 47: Net working capital movements
Net working capital movements 6 months to 30 Rolling 12 Rolling 12 12 months to 6 months to 30 September months to months to September 31 March 2013 30 September 30 September 2012 2013 2013 2012 Working capital (£41.0m) £13.8m (£29.9m) (£26.5m) £24.9m inflow/(outflow) Cash conversion 44.2% 116.3% 54
Slide 48: Mobilisation costs
Mobilisation costs 2014 H1 2013 FY Movement Opening balance £23.2m £21.0m £2.2m Costs capitalised £3.0m £9.6m (£6.6m) Costs amortised (£4.5m) (£7.4m) £2.9m Closing balance £21.7m £23.2m (£1.5m) 48
Slide 49: Provisions
Provisions Deferred Insurance contingent Total reserve consideration At 1 April 2013 £8.0m £2.2m £10.2m Amounts recognised in the income statement – £0.6m £0.6m Utilised within the captive insurance subsidiary – (£0.6m) (£0.6m) At 30 September 2013 £8.0m £2.2m £10.2m Included in current liabilities
Slide 50: Pensions deficit
Pensions deficit Group Other Total Scheme Schemes Pension assets £137.1m £8.3m £145.4m Pension obligations (£164.2m) (£8.6m) (£172.8m) Deficit (£27.1m) (£0.3m) (£27.4m) % of net assets 6.6% 0.1% 6.7% % of market cap 2.5% 0.0% 2.5% The total scheme deficit at 31 March 2013 was £29.9m 50
Slide 51: Pro-forma prior year
Pro-forma prior year Gross up for H1 2014 full six-month H1 2013 (excluding Organic H1 2013 impact of Pro-forma current year growth Creativevents acquisitions) and Enara Headline £945.0m £48.5m £993.5m £1,044.2m 5.1% revenue Headline operating £55.0m £4.6m £59.6m £62.3m 4.5% profit Headline operatin
Slide 52: Headroom and funding maturity
Headroom and funding maturity £600m £30m £162m £400m £320m £200m £310m £222m £40m £0m Facilities 2014 HY Uncommitted overdrafts 1-5yr 5-10yr >10yr Net Debt Headroom 52