MITIE Group PLC · LSE:MTO
MITIE — FY2011 Earnings Presentation
49 slides from MITIE's earnings presentation, May 23, 2011
Slide 1: Good results and strong growth aspirations
Good results and strong growth aspirations MITIE Group PLC Preliminary results presentation 23 May 2011
Slide 2: Good results
OVERVIEW Good results + 10.0% 81% Revenue 2012 budgeted revenue secured £1,891.4m (2010: £1,720.1m) (2010: 75%) + 16.5% £6.8bn Operating profit before other items Order book £108.3m (2010: £93.0m) (2010: £6.4bn) + 15.9% £11.4bn Earnings per share before other items Sales pipeline 22.6p (2010: 19.5p)
Slide 3: Highlights of the year
OVERVIEW Highlights of the year • Added significantly to portfolio of large, integrated, technically-led facilities management (FM) contracts • Good progress in underlying organic revenue growth – second half 5.3%; full year 3.5% • 75% of contract awards from private sector – Private sector accounte
Slide 4: Group structure
OVERVIEW Group structure MITIE Facilities Technical Facilities Property Asset Overseas Management Management Management Management FY2011 Revenues £882.2m £437.1m £509.7m £62.4m £25.0m EBITA margin 6.4% 5.6% 4.2% 3.2% • Total security • Integrated FM • Property • Decentralised management • M&E engin
Slide 5: Enablers for growth
BUSINESS REVIEW Enablers for growth • Record order book and sales pipeline – 81% of 2012 budgeted revenues secured (2010: 75%) – £6.8bn order book – £11.4bn sales pipeline • Low gearing and no material pension deficit • Excellent client relationships drive organic growth • Resilient business model a
Slide 6: Transformational contract awards
BUSINESS REVIEW Transformational contract awards • Rolls-Royce: pan-European total facilities and energy management • Vodafone: total facilities and energy management for entire UK and Irish property portfolio • UK Home Office: Campsfield House Immigration Removal Centre: full custody and detention
Slide 7: Revenue by market sector
BUSINESS REVIEW Revenue by market sector Pharmaceutical Leisure 1% 3% Central and Local Construction Government Utilities 3% 12% Transport & Logistics 5% 6% Technology & Social Housing Communications 12% 6% Manufacturing 7% Education 9% Healthcare Retail 4% 10% Property Financial & Contribution to g
Slide 8: Market shares
BUSINESS REVIEW Market shares Private Sector Market size pa MITIE share (%) Finance & professional £5bn 4.7 Manufacturing £5bn 2.7 Technology & communications £4bn 3.0 Retail £5bn 3.7 Property management £6bn 3.2 Utilities £8bn 1.2 Transport and logistics £11bn 1.1 Construction £9bn 0.5 Leisure £6bn
Slide 9: Sales pipeline of £11.4 billion
BUSINESS REVIEW Sales pipeline of £11.4 billion Support Services Transport Utilities Central government Property Management and Real Estate Retail Local government Manufacturing Leisure Technology Financial and Professional Services Construction Social Housing Other public sector Education Health Pr
Slide 10: Private sector awards and renewals
BUSINESS REVIEW Private sector awards and renewals • Key contracts retained/expanded − Tesco: retained 100% of our existing business and added £13m of new business to our cleaning portfolio ~ £80m over 3 years − RWE Npower: 5-year integrated FM contract ~ £45m − Telereal Trillium: 7-year cleaning co
Slide 11: Private sector opportunities
BUSINESS REVIEW Private sector opportunities • Opportunity to repeat the growth achieved with Rolls-Royce and Vodafone with a number of existing major clients over the next 2-3 years − Significant integrated FM opportunities in financial services and retail • Energy services currently 34% of revenue
Slide 12: International strategy progress
BUSINESS REVIEW International strategy progress • Awarded the pan-European contract to deliver total facilities and energy management for Rolls-Royce – Mobilised in December 2010 in 61 sites across 7 countries: UK, Germany, France, Poland, Norway, Sweden, Finland • Self-delivery and supply-chain man
Slide 13: Following our clients overseas
BUSINESS REVIEW Following our clients overseas International revenues of existing clients Asia Pacific 8% Americas 20% Top 100 43% 57% clients EMEA 72% International UK MITIE Group PLC Preliminary results presentation 13
Slide 14: Public sector developments
BUSINESS REVIEW Public sector developments • Significant progress in Justice with the award of Campsfield House Immigration Removal Centre, integrated FM contract • Increasing use of Government Framework Agreements which help to reduce procurement times – Appointed to Office of Government Commerce B
Slide 15: Public sector awards and renewals
BUSINESS REVIEW Public sector awards and renewals • Key contracts retained/expanded – Orbit South and Orbit East: 10-year social housing contract for reactive repairs, voids and planned improvement works to 14,000 homes ~ £110m – Hull & East Yorkshire Hospitals NHS Trust: 5-year contract to provide
Slide 16: Major public sector opportunities
BUSINESS REVIEW Major public sector opportunities • Justice − MOJ pipeline of up to £1bn − Total facilities management contracts for MOJ – decision due in Autumn • Health − Energy services framework agreement − Large increase in FM opportunities • Local authorities − Edinburgh City Council – facilit
Slide 17: Management Incentive Through Investment Equity
BUSINESS REVIEW Management Incentive Through Investment Equity • Launched a £10m Entrepreneurial Fund in January to expand the MITIE Model • Seeking dynamic management teams with innovative ideas for starting mutually owned businesses • MITIE owns minimum 51% and the management team owns maximum 49%
Slide 18: Technology
BUSINESS REVIEW Technology • Clients want real time information on the performance of their assets and estates that is online and accessible 24 /7 • Recent investment has been focused on – MiTec: remote monitoring hub in Northern Ireland – MiWorld: Client-facing management information suite that pro
Slide 19: People
BUSINESS REVIEW People • Appointed Katherine Thomas as our new Group HR director • Formalising our people agenda, with particular emphasis on recruitment and retention, talent management, mentoring, succession planning and leadership development • Launched the first MITIE graduate programme • Establ
Slide 20: Suzanne Baxter, Group Finance Director
Suzanne Baxter Group Finance Director MITIE Group PLC Preliminary results presentation 20
Slide 21: Track record
FINANCIAL REVIEW Track record Revenue Basic Earnings Per Share before other items MITIE Group PLC Preliminary results presentation 21
Slide 22: Financial highlights
FINANCIAL REVIEW Financial highlights Growth 2011 2010 % Revenue (£m) 1,891.4 1,720.1 10.0 Operating profit before other items (£m)* 108.3 93.0 16.5 Operating margin 5.7% 5.4% +0.3pp Profit before tax and other items (£m)* 105.7 91.7 15.3 Effective tax rate before other items* 25.0% 27.6% -2.6pp Bas
Slide 23: Financial KPIs
FINANCIAL REVIEW Financial KPIs KPI Target 2011 2010 Group operating profit Maintain existing margins 5.7% 5.4% before other items Conversion of EBITDA Over 80% of group EBITDA converted to cash 86.7% 95.2% to cash Capital expenditure Maintain below 2.0% of revenue 1.4% 1.5% At least in line with un
Slide 24: Order book
FINANCIAL REVIEW Order book MITIE Group PLC Preliminary results presentation 24
Slide 25: Order book by business
FINANCIAL REVIEW Order book by business MITIE Group PLC Preliminary results presentation 25
Slide 26: Revenue analysis
FINANCIAL REVIEW Revenue analysis Total Organic 2011 2010 growth growth £m £m % % Facilities Management 882.2 824.6 7.0 4.6 Technical Facilities 437.1 344.8 26.8 6.8 Management Property Management 509.7 496.2 2.7 (6.5) Asset Management 62.4 54.5 14.5 14.5 Total Group 1,891.4 1,720.1 10.0 2.1 MITIE G
Slide 27: Revenue analysis
FINANCIAL REVIEW Revenue analysis 2011 2010 Growth £m £m % As reported 1,891.4 1,720.1 10.0 Dalkia proforma full year effect (1) - 64.3 - EPS proforma full year effect (2) - 49.2 - Acquired in year - Ireland (19.4) - - Proforma organic 1,872.0 1,833.6 2.1 Discontinued (8.3) (32.2) Underlying – organ
Slide 28: Revenue growth analysis
FINANCIAL REVIEW Revenue growth analysis * Excluding discontinued activities in engineering contracting MITIE Group PLC Preliminary results presentation 28
Slide 29: Revenue bridge
FINANCIAL REVIEW Revenue bridge Organic growth Acquired growth MITIE Group PLC Preliminary results presentation 29
Slide 30: Operating profit analysis
FINANCIAL REVIEW Operating profit* analysis 2011 2010 Total growth £m £m % Facilities Management 56.2 50.5 11.3 Margin 6.4% 6.1% Technical Facilities Management 24.6 15.5 58.7 Margin 5.6% 4.5% Property Management 21.4 25.1 (14.7) Margin 4.2% 5.1% Asset Management 2.0 1.9 5.3 Margin 3.2% 3.5% Subtota
Slide 31: Operating profit margin
FINANCIAL REVIEW Operating profit* margin 5.7 *Before other items MITIE Group PLC Preliminary results presentation 31
Slide 32: Other items
FINANCIAL REVIEW Other items 2011 2010 £m £m Amortisation of acquisition related intangible costs 8.9 5.3 Acquisition cost of Dalkia FM in Ireland 0.3 - Acquisition related integration costs 4.8 6.6 Restructuring cost of Property Management business 4.8 - Total other items included in operating prof
Slide 33: Acquisitions
FINANCIAL REVIEW Acquisitions • Acquisition of Dalkia FM in Ireland for maximum consideration of €12.5m – €9.5m paid upfront in cash and €1.0m of contingent deferred consideration now paid – £1.0m spent on integration of sales, back office and systems • Earnout of six minority companies for £6.8m, p
Slide 34: Balance sheet
FINANCIAL REVIEW Balance sheet March 2011 March 2010 £m £m Goodwill and other intangible assets 397.7 391.4 Other non-current assets 80.0 68.6 Current assets* 475.6 409.5 Current liabilities* (454.2) (384.7) Non-current liabilities* (24.6) (34.8) Net debt (76.5) (86.6) Net assets 398.0 363.4 * Exclu
Slide 35: Pensions
FINANCIAL REVIEW Pensions £m Group scheme Other schemes Total Pension assets 114.5 9.8 124.3 Pension obligations (117.5) (9.3) (126.8) Contract adjustment - (0.5) (0.5) Deficit (3.0) - (3.0) % of group net assets 0.8% • Group scheme triennial valuation due as at 1 April 2011 • Following the UK gover
Slide 36: Cash conversion
FINANCIAL REVIEW Cash conversion 105.9 MITIE Group PLC Preliminary results presentation 36
Slide 37: Cash conversion calculation
FINANCIAL REVIEW Cash conversion calculation 2011 2010 £m £m Cash generated by operations 102.5 98.4 Operating profit before other items 108.3 93.0 Restructuring and acquisition costs (9.9) (6.6) Operating profit before amortisation of acquired intangibles 98.4 86.4 Depreciation and non-acquisition
Slide 38: Cash flow and net debt movement
FINANCIAL REVIEW Cash flow and net debt movement 2011 2010 £m £m Operating cash flows 112.9 104.5 Movement in working capital (10.4) (6.1) Cash generated by operations 102.5 98.4 Tax and other operating items (16.8) (26.1) Acquisitions (net of share placing) (11.8) (116.1) Other investing activities
Slide 39: Funding
FINANCIAL REVIEW Funding Amount Cost Repayment Core banking facilities - to July 2011 £230.0m LIBOR +40-80bp Jan 2012 - from July 2011 £250.0m LIBOR +130-225bp Sept 2015 Overdraft £40.0m Base rate + 100-175bp On demand US private placement $48.0m fixed at 3.88% $96.0m Dec 2017 loan notes $48.0m at £
Slide 40: Future investment
FINANCIAL REVIEW Future investment • Acquisitions – to complement existing capabilities and enhance service offerings, particularly in property and estates management, environmental and carbon consultancy – 10-20% post tax ROCE • Energy asset based bids – increasing scale and scope – 30%+ ROCE • Oth
Slide 41: Sustainable profitable growth
FINANCIAL REVIEW Sustainable profitable growth * Before other items MITIE Group PLC Preliminary results presentation 41
Slide 42: Ruby McGregor-Smith, Chief Executive
Ruby McGregor-Smith Chief Executive MITIE Group PLC Preliminary results presentation 42
Slide 43: Summary
OVERVIEW Summary • Strong revenue growth and organic growth improving • Series of transformational contracts retained/awarded during the year • Second largest energy services company in the UK • Private sector 63% of revenues • Improved operating profit margin • Excellent cash conversion • Low lever
Slide 44: Outlook
OVERVIEW Outlook • Excellent visibility of revenues - 81% of 2012 revenues secured • Record order book - £6.8bn • Substantial pipeline of opportunities - £11.4bn • Well-positioned to increase market share in outsourcing and energy services • International expansion over the next five years • Financi
Slide 45: Questions?
Questions? MITIE Group PLC Preliminary results presentation 45
Slide 46: Facilities Management
APPENDIX: OPERATING REVIEW Facilities Management • Significant progress, particularly in our ability to bid for and win large national contracts • Developed niche offerings for specific sectors including retail, transport, healthcare, justice and prisons • Expanded our security business to offer tot
Slide 47: Technical Facilities Management
APPENDIX: OPERATING REVIEW Technical Facilities Management • Our technical FM expertise underpinned several transformational contract awards including Rolls-Royce, Vodafone and Royal Opera House • Launched National Mobile Solutions – delivers fast and responsive mobile technical FM services across t
Slide 48: Property Management
APPENDIX: OPERATING REVIEW Property Management • The integration of our engineering contracting business into Property Management is complete • Expanding opportunities in social housing market – Significant opportunities in photovoltaic installation • Residential solutions business for new housing m
Slide 49: Asset Management
APPENDIX: OPERATING REVIEW Asset Management • New economic and technology initiatives enabling major improvements in performance of energy assets • Health sector opportunities in outsourced energy centres which could extend to prisons and also education • Retail sector interest in outsourced energy