Mitie Group Plc · LSE:MTO
Mitie — H1 FY25 Earnings Presentation
29 slides from Mitie's earnings presentation, Nov 21, 2024
Slide 1: Continued good strategic progress and financial performance
Continued good strategic progress and financial performance Results presentation for the six months ended 30 September 2024 21 November 2024
Slide 2: H1 FY25 highlights
H1 FY25 highlights Continued growth across all key metrics Financial performance Growth indicators Capital deployment Revenue: £2.4bn Wins/renewals2: £3.7bn M&A spend ytd: £49m3 +14% +54% +7% 2.5 4 50 3 2 2 30 YoY YoY YoY 1 10 1.5 0 H1 FY23 H1 FY24 FY25 H1 FY23 H1 FY24 H1 FY25 H1 FY23 H1 FY24 H1 FY2
Slide 3: Financial update
Financial update Simon Kirkpatrick Chief Financial Officer 3
Slide 4: Headlines
Headlines H1 FY25 revenue and profit growth of 14% • Revenue growth of 14.0% includes Headlines (£m) H1 FY25 H1 FY242 % change strong organic growth of 8.1% Revenue1 2,430 2,132 +14.0 • Operating profit improved by 13.9%, underpinned by ongoing margin Operating profit before other items 101.1 88.8 +
Slide 5: Revenue
Revenue Double digit revenue growth across all divisions • BS growth due to new wins, Revenue1 (£m) H1 FY25 H1 FY242 % change ‘surge response’ security work, projects, and Business Services (BS) 1,079 956 +12.9 acquisitions, partly offset by completion of public sector contracts Technical Services (
Slide 6: Revenue
Revenue Good organic growth supplemented by strategic acquisitions 126 2,430 5.9% 68 £m 91 13 3.2% 0.6% 2,132 4.3% Organic growth 8.1% Revenue growth: +14.0% H1 FY24 Core FM Projects Pricing Acquisitions1 H1 FY25 1 Includes Landmarc consolidation revenue of £42m 6
Slide 7: Operating profit
Operating profit 13.9% profit improvement with all divisions increasing year-on-year • BS increase driven by surge response Operating profit1 (£m) H1 FY25 H1 FY242,3 % change security work, MEIs and acquisitions, offset by completion of higher margin public sector contracts Business Services (BS) 72
Slide 8: Operating profit
Operating profit Resilient business model, with 13.9% profit growth after more than £20m of investments and headwinds in H1 £m 11.0 (7.3) H1 FY25 profit (11.2) margin: 4.2% 7.8 H1 FY24 profit 14.7 (2.7) margin: 4.2% 101.1 88.8 Investments & headwinds -£21.2m Strategic profit growth +£33.5m Profit gr
Slide 9: Cost inflation and Autumn Budget headwind
Cost inflation and Autumn Budget headwind Inflation tightly managed in FY25; additional NI headwind in FY26 FY25 INFLATION IMPACT • H1 FY25 net P&L impact from cost H1 Full Year inflation of £3m, reflecting >95% pricing Total cost inflation (£71m) c.(£143m) pass through on contracts Recovery from pr
Slide 10: Cash flow
Cash flow Free cash flow generation, despite seasonal working capital outflow and higher lease, interest and tax payments Cash flow (£m) H1 FY25 H1 FY241 • Strong profit generation drives £34.3m FCF inflow in H1 Operating profit before other items 101.1 88.8 • Cash other items of £20.6m relating to
Slide 11: Balance sheet
Balance sheet Strong and stable balance sheet underpins ongoing shareholder returns, and strategic acquisitions • Increase in net debt due to capital £m H1 FY25 FY24 deployment undertaken in H1 FY25 (£120.7m) Closing net (debt) (188) (81) • Leverage of 0.7x below target Average daily net (debt) (219
Slide 12: Summary
Summary On track to meet FY25 expectations after good progress in H1 CME FINANCIAL TARGETS H1 PERFORMANCE FY25 GUIDANCE High single digit revenue growth Double digit revenue growth across Mid to high single digit revenue growth in (CME baseline: £4.4bn) all divisions H2, double digit FY25 growth SUP
Slide 13: Facilities Transformation (FY25 – FY27)
Strategic update Facilities Transformation (FY25 – FY27) Phil Bentley Chief Executive Officer 13
Slide 14: Facilities Transformation: FY25 – FY27
Facilities Transformation: FY25 – FY27 Our Three-Year Plan is based on satisfying our customers’ evolving needs; delivering our pillars of growth; and meeting our ambitious financial targets EVOLVING CUSTOMER NEEDS KEY PILLARS OF GROWTH FY27 FINANCIAL TARGETS £1.2bn to FY27 High single digit revenue
Slide 15: FY25 is the foundation year of our new Plan
FY25 is the foundation year of our new Plan We have invested >£10m1 into resources, capabilities and technology in H1 FY25 to drive future growth and margin expansion SALES TEAM MARKETING PROJECT CAPABILITIES TECHNOLOGY Appointment of CSO Investment in thought leadership – Decarbonisation Core syste
Slide 16: Good momentum in key account growth
Good momentum in key account growth Key account £159m (£600m 3Y growth and Record contract wins & renewals; total order book growing; pipeline scope increase target) of opportunities expanded in H1 New Wins1 (+62% yoy) Renewals/Extensions1 (+40% yoy) Order book1 (+11% in H1) £2.1bn 13 £12.6bn 2.5 2.
Slide 17: Pipeline +£9bn to £22bn over past two years
Pipeline +£9bn to £22bn over past two years Key account £159m (£600m 3Y growth and We are targeting sectors with significant growth opportunities, where we can scope increase target) leverage our market leading expertise IMMIGRATION & JUSTICE £6bn DEFENCE £2bn CNI & DATA CENTRES £1bn RETAIL £2bn Imp
Slide 18: Projects upsell expected to accelerate
Projects upsell expected to accelerate Projects £13m (£200m 3Y upsell organic Growing pipeline and order book; actions taken to address challenges in the target) telecoms business M&E, HVAC, Building fabric Telecoms infrastructure Fire & Security business Slough data centre David Lloyd solar PV 132k
Slide 19: Good progress from infill M&A
Good progress from infill M&A Infill £126m M&A (£400m 3Y £49m invested in high growth markets (ytd), underpinned by attractive macro trends target) POWER & GRID CONNECTIONS FIRE & SECURITY SPAIN Mitie: Leading HV Independent Connections Provider Mitie: Top 3 operator in market Mitie: Top 10 Hygiene
Slide 20: Margin Enhancement Initiatives (MEIs)
Margin Enhancement Initiatives (MEIs) >5% Operating £11m of MEI savings delivered in H1; guidance for FY25 raised to £25m (from £20m); margin by FY27 extensive programme of additional AI-led initiatives in pipeline for FY26 H1 FY25 MEIs Margin headwinds AI use cases • Employers’ NICs Target Operatin
Slide 21: Proactive and growing capital deployments
Proactive and growing capital deployments Prioritising the return of capital to shareholders and targeted infill M&A SOURCES USES FY25–FY27 Progressive dividends Payout ratio: 30 – 40% Free cash flow >£100m in FY25 No shareholder dilution Purchase of shares for incentive schemes Rising to Infill M&A
Slide 22: Summary: H1 FY25
Summary: H1 FY25 Continued good strategic progress and financial performance Revenue and Record wins & Projects operating renewals, and capabilities profit up 14% pipeline of expanded in high opportunities growth markets On track to Autumn Budget Continued meet Board NIC headwind to progress towards
Slide 23: Q&A
Q&A 23
Slide 24: Appendices
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Slide 25: Business Services
Business Services Increase / £m H1 FY25 H1 FY241 % change (decrease) Security1 517 428 89 +21 Hygiene 224 194 30 +16 Central Government1 185 217 (32) (15) Spain 79 51 28 +55 Waste 43 38 5 +13 Landscapes 31 28 3 +11 Total revenue 1,079 956 123 +13 Operating profit before other items 72.8 68.4 4.4 +6.
Slide 26: Technical Services
Technical Services Increase / £m H1 FY25 H1 FY241 % change (decrease) Engineering 665 636 29 +5 Defence1 248 189 59 +31 Total revenue 913 825 88 +11 Operating profit before other items 30.1 28.2 1.9 +6.7 Operating margin before other items, % 3.3% 3.4% (0.1ppt) Total order book £4.3bn £3.8bn +13 1Re
Slide 27: Communities
Communities Increase / £m H1 FY25 H1 FY241 % change (decrease) Local Government & Education 157 142 15 +11 Healthcare 153 135 18 +13 Care & Custody1 128 74 54 +73 Total revenue 438 351 87 +25 Operating profit before other items2 23.2 16.6 6.6 +39.8 Operating margin before other items, %2 5.3% 4.7% +
Slide 28: Return on invested capital (ROIC)
Return on invested capital (ROIC) £m H1 FY253 H1 FY243 % change Operating profit before Other Items1 222.5 182.9 +22 Tax2 (48.0) (31.1) +54 Operating profit before other items after tax 174.5 151.8 +15 Invested capital 688.0 602.8 +14 ROIC % 25.4% 25.2% +0.2ppt 1Operating profit before Other items f
Slide 29: Invested capital (for ROIC)
Invested capital (for ROIC) Increase / £m H1 FY25 H1 FY24 % change (decrease) Net assets 418.5 411.6 6.9 +2 Add: Non-current liabilities 359.1 333.4 25.7 +8 Current provisions 39.4 57.7 (18.3) (32) Current Private Placement notes 30.0 - 30 nm Deduct: Non-current deferred tax assets - (19.7) 19.7 nm