Slide 1: Full Year 2021 Results Presentation
Mitie Group plc The UK’s Leading Facilities Management Company A defining year of strategic progress and financial resilience Full Year 2021 Results Presentation 10 June 2021
Slide 2: FY21: A defining year – Strategic progress and financial resilience
FY21: A defining year – Strategic progress and financial resilience • Good trading resilience during the COVID pandemic • Strengthened balance sheet – rights issue, refinancing, BBB credit rating • Interserve FM acquisition performing better than expected and accelerates value creation • Market lead
Slide 3: Simon Kirkpatrick, Chief Financial Officer
Simon Kirkpatrick Chief Financial Officer
Slide 4: A resilient performance, with Interserve FM delivering ahead of expectations
A resilient performance, with Interserve FM delivering ahead of expectations Continuing operations (£m) FY21 FY20 Change % • Headline revenue growth of 19.1% Revenue1 2,589 2,174 19.1% Mitie standalone revenue2 2,139 2,174 (1.6)% • Operating profit ahead of expectations Operating profit before other
Slide 5: New public sector revenue in Business Services offset impact of COVID on Technical Services
New public sector revenue in Business Services offset impact of COVID on Technical Services variable and project works Continuing operations (£m) FY21 FY20 Change % • Technical Services impacted by reduction in variable and Technical Services 820.7 947.2 (13.4)% projects works Business Services 1,08
Slide 6: Operating profit impacted by revenue mix, reduced project work and re-instated incentives
Operating profit impacted by revenue mix, reduced project work and re-instated incentives Continuing operations, before • Technical Services impacted by reduction FY21 FY20 Change % other items (£m) in higher margin works and loss of MoJ and Technical Services 26.4 55.9 (52.8)% NHS Properties contra
Slide 7: The Interserve FM acquisition and synergy capture does not fully mitigate the profit impact of COVID
The Interserve FM acquisition and synergy capture does not fully mitigate the profit impact of COVID FY20 Actual COVID impact Contract Other wins & Interserve FM Accelerated Reinstatement FY21 Actual on trading (net losses at MoJ losses (4 months) synergies of incentives of COVID and NHSP net of cos
Slide 8: £6.2m of synergies accelerated into FY21
£6.2m of synergies accelerated into FY21 Early delivery • Early delivery of synergies in FY21 £m in FY21 Removing functional overheads 2.2 • Functional overhead savings include 161 roles Reducing the property portfolio 0.2 • 5 property exits already completed, initial Leveraging our buying power 2.6
Slide 9: Trading has significantly improved in the second half of the year
Trading has significantly improved in the second half of the year Continuing operations (£m) FY21 H1 21 H2 21 Change % • Revenue and operating profit run rates improved in H2 Revenue1 2,589 972 1,617 66% through variable works and public sector wins Operating profit before other items 63.4 21.5 41.9
Slide 10: New investment grade credit rating (BBB) reflects progress on balance sheet strengthening
New investment grade credit rating (BBB) reflects progress on balance sheet strengthening and lower net debt £m FY21 FY20 • Rights issue and Interserve acquisition have driven increase in net assets Net assets 362 81 Average daily net debt 47 328 • Closing-to-average net debt ‘gap’ significantly red
Slide 11: Acquisition of Interserve FM generates goodwill of £3.3m
Acquisition of Interserve FM generates goodwill of £3.3m £m FY21 £m Cash paid to seller 105.0 Customer contracts and relationships 219.3 Shares issued to seller 94.6 Net working capital (1.4) Provisional completion accounts estimate (57.6) Cash and cash equivalents 40.4 Total consideration 142.0 Def
Slide 12: Our net assets have been transformed by the rights issue and acquisition
Our net assets have been transformed by the rights issue and acquisition • Rights issue and acquisition materially strengthened the balance sheet • Customer contracts and relationships valued at >£200m, more than the cost of Net assets acquired with Interserve FM £138.7m the acquisition • Goodwill o
Slide 13: Total Financial Obligations have fallen by c.60% over the last three years
Total Financial Obligations have fallen by c.60% over the last three years 442 387 • TFO reduced by £260m over last 83 three years (c.60% decline) 73 57 286 44 64 • Supply chain financing facility closed; 20 71 invoice discounting much reduced 181 47 16 52 • Leases now reported within net 259 debt u
Slide 14: Significant reduction in average net debt and reduced reporting period fluctuations
Significant reduction in average net debt and reduced reporting period fluctuations Rebased average daily net debt • Significant improvement in 500 average net debt over last 2 years £370m* 450 400 • Period end cash management £269m* ceased, balance sheet normalised 350 300 • Working capital has dri
Slide 15: Positive cash performance underpinned by rights issue and working capital improvement
Despite the impact of COVID, positive cash performance underpinned by rights issue and underlying working capital improvement Cash flow (£m) FY21 FY20 Operating profit before other items 63.4 86.1 • Reduction in net debt in FY21, after (continuing operations) acquiring Interserve FM, of £66.3m Add b
Slide 16: Underlying working capital improvement driven by billing process efficiency and automation
Underlying working capital improvement driven by billing process efficiency and automation • Underlying working capital improvement of £62m • Tax TTP of £52m £m repaid in year • Balance sheet ‘normalisation’ of £46m in year 16
Slide 17: Financial summary, FY22 priorities and outlook
Financial summary, FY22 priorities and outlook FY21 financial summary FY22 priorities • Resilient performance during COVID with Mitie standalone Technology: productivity and efficiency • Driving performance, productivity, reducing ‘waste’ revenue1 decline of only 1.6% • Automated contract reporting,
Slide 18: Phil Bentley, Chief Executive
Phil Bentley Chief Executive
Slide 19: Our response to COVID was immediate and extensive
Our response to COVID was immediate and extensive • 65,000 Frontline Heroes attending essential sites throughout the Pandemic • Nightingale Hospitals in Cardiff, ExCeL and Manchester • Testing Centres – 200 locations and 7,500 staff directly employed • Brexit Project – Security at 6 ports (1,500 FTE
Slide 20: Our strategic focus remained unwavering
Our strategic focus remained unwavering • Putting Customers at the heart of our business • Building a winning culture and showing our People that we care • Leading the Digital Transformation of our industry through Technology • Transforming our Cost Base and strengthening our Balance Sheet 20
Slide 21: Customer: Great NPS and retention rates
Customer: Great NPS and retention rates NPS at record high Improving retention and win rates Key retentions: Retention Wins 60 100% 40 80% Points (pts) 20 60% 0 40% -20 20% -40 0% FY18 FY19 FY20 FY21 New contract wins: FY17 FY18 FY19 FY20 FY21 Leadership positions in our three key Mitie attracts a h
Slide 22: Customer: Interserve FM service lags Mitie – progress started
Customer: Interserve FM service lags Mitie – progress started Annual • ISV FM NPS Wins, renewals and extensions (since 1 December 2020) Value £m – 18ppts PFI 21 • SAM assessments completed with new incentives Hospitals 29 • ‘Mitie First’ Local Authorities 10 Central Government 100 • Re-set client re
Slide 23: People: Investing in people to create a great place to work
People: Investing in people to create a great place to work Staff attrition Employee engagement FY21 FY17 25% 60% 55% 20% 50% 45% 46% Number of hourly paid 20% colleagues above Minimum 81% 31% 16% 15% 40% 33% Wage 15% 30% 10% Number of apprentices 843 502 20% 5% 10% Apprentice Levy spend £2.1m £0.4m
Slide 24: People: Diversity & Inclusion is a key value
People: Diversity & Inclusion is a key value The New Mitie Group Executive Team (MGX) Phil Bentley Simon Kirkpatrick Jasmine Hudson Cijo Joseph Peter Dickinson 50% Mitie Board female Chief Executive Chief Financial Officer Group HR Chief Technology & Chief of Staff and Director Information Officer G
Slide 25: Technology: Accelerating roll out across Interserve customers
Technology: Accelerating roll out across Interserve customers IT capability uplift from the acquisition to existing Mitie technology stack Interserve customers Interest Engagement In Delivery Mozaic 26 15 11 34 customers Aria 10 7 2 Digital Workplace 8 7 0 Connected Engineer 2 2 0 94 customers Digit
Slide 26: Technology: Project Forte - £4.2m benefits in FY21; go-live in December 2021
Technology: Project Forte - £4.2m benefits in FY21; go-live in December 2021, on budget £48m with benefits profile £25m on track CURRENTLY DELIVERED TESTING GO LIVE Build complete on Maximo and Aria ACE system 2 cycles middleware MiJobs upgrade Click, Aria, Customer Interfaces, interface of 4200 Max
Slide 27: Costs: Procurement, Back Office, HR and IT are the key to the £42m synergy target
Costs: Procurement, Back Office, HR and IT are the key to the £42m synergy target upgrade Procurement In year Exit run Spend under MFA contract Spend top 250 Cost savings £m Total £m savings rate 276 231 333 329 278 IT 5.5 FY21 6.21 16.2 298 313 302 64% 68% 72% 59% 60% 62% 532 66% 547 Finance and ba
Slide 28: The future: The 'Science of Service' for effective workspaces
The future: The ‘Science of Service’ for effective workspaces • Greater appreciation for hygiene, security and remote monitoring • Increased value attributed to the use of technology • Focus on Wellbeing and hybrid working • Decarbonisation imperative driving technology uptake • New product developm
Slide 29: New Mitie, New Strategy: From Transformation to Growth
New Mitie, New Strategy: From Transformation to Growth Transformation Customer Increasing growth Growth People Margin enhancement Technology Cash generation Cost Boosting shareholder return / ROIC 29
Slide 30: New Mitie, New Strategy: Revenue growth
New Mitie, New Strategy: Revenue growth • Leveraging scale to win market share • ‘One Mitie’ driving cross-selling • Positioning as ‘strategic partner’ • Focused sector specialisation • Innovation and new product development • Increasing presence on Government Frameworks • Targeting ‘capital budgets
Slide 31: New Mitie, New Strategy: Margin Enhancement
New Mitie, New Strategy: Margin Enhancement • Contract profitability review • Productivity ‘league tables’ • Standard Digital Automation • ‘Mitie First’ • Strategic Supplier Management • Renewal margin management Medium term target: Operating margin of 4.5-5.5% 31
Slide 32: New Mitie, New Strategy: Free cash flow generation
New Mitie, New Strategy: Free cash flow generation We start in a stable position Management Initiatives • Leverage is at target levels • Improve billing & working capital conversion • Pension deficit is falling • Reduce client credit terms • Technology transformation ends in FY22 • Discounts for tim
Slide 33: New Mitie, New Strategy: Capital Allocation Policy
New Mitie, New Strategy: Capital Allocation Policy Interserve FM Shareholder Balance Sheet Prioritised investments synergy realisation returns Dividends expected Maintain structural Focused to resume in FY22 leverage around 1x Bolt on organic EBITDA to average acquisitions Investment in Payout align
Slide 34: Summary
Summary • The transformation of Mitie is complete • The integration of Interserve FM is progressing well • Outlook for FY22 anticipated to be materially ahead of our prior expectations • The ‘Science of Service’ is at the heart of our vision for new Mitie • New strategy focusing on increasing growth
Slide 35: Appendix
Appendix
Slide 36: Customer: We have built award-winning Marketing Capabilities
Customer: We have built award-winning Marketing Capabilities • 100,000 followers on LinkedIn and Twitter, 23% year on year increase • Mitie Corporate profiles viewed 4.5 million times • Hubspot marketing automation tool – outbound direct marketing click through • 500 downloads • 700 downloads • 1,40
Slide 37: Customer: SAMs have transformed account performance
Customer: SAMs have transformed account performance SAM accounts Unitary management approach Investments in customer (customer service), people outperform overall through SAM accounts positively (SAM programme), technology (Aria, Mozaic, CW) and Mitie NPS results impacting customer satisfaction inno
Slide 38: ESG: We have set ambitious industry-leading targets
ESG: We have set ambitious industry-leading targets OUR ESG STRATEGY DRIVING GROWTH Net Zero Carbon Emissions by 2025 • Supports customer retention and winning new bids • Increasingly clients evaluate ESG as part of the bid criteria DO “If Mitie wasn’t in top quartile [of sustainability] Eliminate c
Slide 39: Technical Services
Technical Services £m FY21 FY20 Change £m Change % Maintenance 697 790 (93) (11.7)% Engineering Projects 124 157 (33) (21.5)% Total revenue 821 947 (126) (13.4)% Operating profit before other items 26.4 55.9 (29.5) (52.8)% Margin 3.2% 5.9% (2.7)ppts 39
Slide 40: Business Services
Business Services £m FY21 FY20 Change £m Change % Cleaning 349 340 9 2.6% Security 669 563 106 18.9% Office Services 67 84 (17) (20.3)% Total revenue 1,085 987 98 9.9% Operating profit before other items 49.4 42.2 7.2 17.1% Margin 4.6% 4.3% 0.3ppts 40
Slide 41: Specialist Services
Specialist Services £m FY21 FY20 Change £m Change % Care & Custody 109 110 (1) (1.3)% Landscapes 50 48 2 5.0% Waste 74 82 (8) (8.6)% Total revenue 233 240 (7) (2.5)% Operating profit before other items 22.5 25.3 (2.8) (11.1)% Margin 9.6% 10.6% (1.0)ppts 41
Slide 42: Interserve FM
Interserve FM FY21 (4 months £m under Mitie ownership) Central Government & Defence 230 Communities 96 Business & Industry & Other 124 Total revenue1 450 Operating profit before other items2 13.3 Margin 3.0% 1 Revenue including share of joint ventures and associates from continuing operations; 2 The
Slide 43: Return on invested capital
Return on invested capital £m FY21 Net assets 361.8 Add: Non-current liabilities 406.5 Current provisions 48.3 Amortisation of acquisition-related intangibles including JVs & 6.7 associates related to Interserve Deduct: Non-current derivative financial assets (14.6) Current derivative financial asse