MITIE Group PLC · LSE:MTO
MITIE — H1 2010/11 Earnings Presentation
39 slides from MITIE's earnings presentation, Nov 22, 2010
Slide 1: Strong results and excellent prospects for growth
Strong results and excellent prospects for growth MITIE Group PLC Interim results presentation 22 November 2010
Slide 2: Agenda
Agenda Highlights & at a glance Clear Business Highlights MITIE at a glance Business Review Simple Strategy Business review Operating review Fresh Thinking Operating review Financial review Financial review Well managed Summary & outlook Summary & outlook MITIE Group PLC Interim results presentation
Slide 3: Strong results
Strong results Highlights & at a glance + 14.7% 95% Revenue 2010/11 budgeted revenue secured Business £918.7m (2009: £801.1m) Review (2009: 93%) + 13.1% Stable Operating profit before other items Underlying Group margins Operating review £48.4m (2009: £42.8m) 5.3% (2009: 5.3%) + 7.6% £110.6m Earning
Slide 4: Strategy
Strategy Highlights & at a glance Deliver stakeholder value through a focus on sustainable profitable growth, achieved by a seven-point plan: Business Review 1. Clients 2. People Operating review 3. Risk 4. Responsibility 5. Integration Financial review 6. Profitability 7. Acquisitions Summary & out
Slide 5: Structure
Structure Highlights & at a glance MITIE Business Review Facilities Technical Facilities Property Asset Overseas & Management Management Management Management Emerging Markets Integrated FM Technology-led FM • Social housing Decentralised energy Operating review • Security • Engineering maintenance
Slide 6: MITIE today
MITIE today Highlights & at a glance • Maintained strong growth in testing market conditions • Benefitting from trend to integrated contracts Business • Continued investments to drive long-term growth Review • Technology • Public sector bidding Operating review • Strategic outsourcing team to bid fo
Slide 7: MITIE today
MITIE today Highlights & at a glance • Investment in bid activity – Rolls-Royce and Vodafone contract awards – Additional resources focused on public sector markets of justice, Business Review health, education and local government – Tendering for new services with MoJ including prisoner escorting,
Slide 8: Market update
Market update Highlights & at a glance • Growing sales pipeline in a challenging economic environment Business • The market is more sophisticated Review – Demand for more complex service bundles Operating – More innovation review – Focus is on outcomes • Radical changes in the public sector Financia
Slide 9: Recent acquisitions
Recent acquisitions Highlights & at a glance • Acquired Dalkia FM in August 2009 – Technical FM capabilities complement the capabilities and skills of our traditional soft FM services business Business Review • Acquired EPS Ltd in November 2009 – Has significantly enhanced our capability in the soci
Slide 10: Technology
Technology Highlights & at a glance • Technology infrastructure supports our clients, our contracts and our business • Clients want real time information on the performance of Business Review their assets and estates that is online and accessible 24/7 • Investment has been focused on Operating – Bac
Slide 11: Facilities Management
Facilities Management Highlights & at a glance • Economic pressure continues to change the market – Growth in large contracts – single, multi and integrated Business Review – Clients looking at all opportunities to make changes • More European FM opportunities Operating review • More investment in t
Slide 12: Technical Facilities Management
Technical Facilities Management Highlights & at a glance • Now have a unified operating structure and a single brand in the UK market place Business Review • Award of Vodafone contract reinforces strategic rationale for Dalkia acquisition Operating • Continuing to develop the business in enhanced co
Slide 13: Property Management
Property Management Highlights & at a glance • Social housing market undergoing changes but opportunities are significant – Market consolidation taking place – Public sector changes will create opportunities Business Review – New model for SH maintenance that is linked to energy (initial client inte
Slide 14: Asset Management
Asset Management Highlights & at a glance • A number of key factors continue to drive this market – Ageing infrastructure – Legislation Business Review – Capital constraints – Support mechanisms such as Renewable Obligation Certificates Operating review & Feed in Tariffs • Opportunities in the priva
Slide 15: Rolls-Royce
Rolls-Royce Highlights & at a glance Background Results 18 year relationship to date Helping Rolls-Royce on its journey • From a single-service cleaning as an organisation contract in Scotland in 1992 to a UK- • Started with 1,400 employees Business Review wide bundled facilities services and over 1
Slide 16: Vodafone
Vodafone Highlights & at a glance Background Results MITIE had the UK technical FM contract Significant expansion of MITIE’s following the acquisition of Dalkia FM existing technical facilities • Vodafone wanted to move to a fully management work for Vodafone Business Review integrated FM model (fro
Slide 17: Waitrose
Waitrose Highlights & at a glance Background Waitrose has specific energy targets to meet • Source all electricity from green sources • Consider all forms of renewable energy for its shops and Business head offices Review • Improve shop energy efficiency by 20 per cent by 2010 (2003 baseline) Soluti
Slide 18: Manchester Airport
Manchester Airport Highlights & at a glance Background Results Contract held by the incumbent for 24 Very successful mobilisation years • Fresh approach • MITIE had no real ongoing client • Innovative and refreshing Business Review relationship thinking • The economic climate meant that the client r
Slide 19: Scottish Government
Scottish Government Highlights & at a glance Background Results The Scottish Government Cleaning and Framework awarded and Associated Services Framework commenced on 1 June 2010 • Available to in excess of 80 separate • Four-year period Business Review bodies, known as Collaborative • Approximately
Slide 20: Suzanne Baxter, Group Finance Director
MITIE Group PLC Group Finance Director Suzanne Baxter Interim results presentation 20 Summary & Financial Operating Business Highlights & outlook review review Review at a glance
Slide 21: Continuing track record
Continuing track record Revenue Highlights & at a glance £m 1,800 1,600 1,400 1,200 1,000 Business Review 800 600 400 200 Operating review 0 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 £p Basic Earnings Per Share* 20.0 18.0 Financial review 16.0 14.0 12.0 * Before other i
Slide 22: Financial highlights – H1
Financial highlights – H1 Highlights & at a glance 30 September 2010 2009 Growth Revenue £918.7m £801.1m 14.7% Business Review Operating profit before other £48.4m £42.8m 13.1% items* Operating Operating margin 5.3% 5.3% - review Profit before tax and other items* £47.5m £42.3m 12.3% Financial revie
Slide 23: KPIs
KPIs Highlights & at a glance KPI Target Sep 10 Sep 09 Mar 10 Group operating profit Maintain existing margin before other 5.3% 5.3% 5.4% Business Review margins items Conversion of EBITDA Over 80% of Group Operating EBITDA converted to 91.0% 90.8% 95.2% review to cash cash Maintain below 2.0% Capit
Slide 24: Segmental analysis
Segmental analysis Highlights & at a glance Revenue Sep 10 Sep 09 % Facilities Management £425.9m £405.3m 5.1% Business Review Technical Facilities Management £209.5m £113.3m 84.9% Operating review Property Management £260.9m £255.2m 2.2% Financial review Asset Management £22.4m £27.3m (17.9%) Summa
Slide 25: Revenue analysis
Revenue analysis Highlights & at a glance Sep 10 Sep 09 Business Review % As reported £918.7m £801.1m 14.7% Operating review Discontinued £(8.3)m £(23.7)m Dalkia half year proforma(1) - £75.3m Financial review EPS half year proforma(2) - £36.5m Ireland £(7.1)m - Summary & outlook Underlying organic
Slide 26: Segmental analysis
Segmental analysis Highlights & at a glance Operating profit* Sep 10 Sep 09 % Facilities Management £25.5m £23.5m 8.5% Business Margin 6.0% 5.8% 0.2pp Review Technical Facilities Management £11.2m £5.9m 89.8% Margin 5.3% 5.2% 0.1pp Operating review Property Management £12.4m £13.5m (8.1)% Margin 4.8
Slide 27: Other items
Other items Highlights & at a glance Sep 10 Sep 09 Integration cost of acquisitions £4.7m £1.1m Business Review Amortisation (acquisition related) £4.4m £1.5m Acquisition cost of Dalkia Ireland £0.3m - Operating review Restructuring cost of Engineering £1.1m - Contracting Financial review Total Othe
Slide 28: Acquisitions
Acquisitions Highlights & at a glance • Acquisition of Dalkia Ireland for maximum consideration of €12.5m, €9.5m paid in cash. £1m spent on integration Business Review of sales, back office and systems • Earnout of six minority companies for £6.8m, paid in Operating review 3.0m MITIE shares and £0.4
Slide 29: Balance sheet
Balance sheet Highlights & at a glance Dalkia Other Mar 10 Sep 10 Ireland Movement Non-current assets £460.0m £10.4m £(0.8)m £469.6m Business Review Goodwill £324.0m £7.4m £(1.1)m £330.3m Other intangible assets £67.4m £3.0m £(1.8)m £68.6m Operating review Current assets £433.2m £6.5m £54.6m £494.3m
Slide 30: Cash Conversion
Cash Conversion Highlights & at a glance Excellent performance continued, above the stated long-term KPI of 80% conversion % 105.9 120 Business Review 95.8%: five-year average 100 Operating review 80 60 Financial review 40 20 Summary & outlook 0 Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 0
Slide 31: Cash flow
Cash flow Highlights & at a glance Sep 10 Sep 09 Mar 10 Operating cash flows £52.9m £48.7m £104.5m Business Review Movement in working capital £(19.1)m £(13.2)m £(6.1)m Cash generated by operations £33.8m £35.5m £98.4m Operating review Tax and other operating items £(10.3)m £(13.3)m £(26.1)m Investi
Slide 32: Net (debt)/funds
Net (debt)/funds Highlights & at a glance Sep 10 Sep 09 Mar 10 Opening net (debt)/funds £(86.6)m £10.9m £10.9m Net increase/(decrease) in cash and Business Review £24.5m £21.5m £(4.8)m cash equivalents Acquisitions (including deferred consideration) £(11.1)m £(122.5)m £(157.9)m Operating review Proc
Slide 33: Borrowings
Borrowings Highlights & at a glance Sep 10 Mar 10 Bank facilities (expire January 2012): Business Review Loan £230.0m £230.0m Overdraft £40.0m £40.0m Operating Borrowing rate (rate above LIBOR) 0.4-0.8% 0.4-0.8% review Financial review Currently reviewing the options in the market to refinance this
Slide 34: Private placement ('PP')
Private placement (‘PP’) Highlights & at a glance • Commitment of £100m of US PP debt which is anticipated to be drawn in December 2010 Business Review • £40m denominated in sterling maturing in 9 years • £60m denominated in US dollars ($96m) maturing in 7 Operating review years • US dollar amount w
Slide 35: Key financial metrics
Key financial metrics Highlights & at a glance Revenues Operating Profit £m before other items £m 2000 100 Business 80 Review 1500 60 1000 40 500 Operating 20 review 0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Basic EPS Dividend per share Financial £p review before other items £p 20.0 8.0
Slide 36: Summary
Summary Highlights & at a glance • Strong half year results, continuing our track record of growth Business Review • Cash generative, with low gearing at 1x EBITDA and commitment of £100m funding through US Private Operating Placement review • Confident of delivering full year earnings for the year
Slide 37: Ruby McGregor Smith, Chief Executive
MITIE Group PLC Chief Executive Ruby McGregor Smith Interim results presentation 37 Summary & Financial Operating Business Highlights & outlook review review Review at a glance
Slide 38: Summary
Summary Highlights & at a glance • Strong set of results • Well diversified portfolio of public and private sector work • Have continued to invest in our capabilities, particularly: Business Review – Sales proposition development – Geographic expansion Operating – People development review – Technol
Slide 39: Outlook
Outlook Highlights & at a glance • Significant progress made in the first half of the financial year Business Review • Excellent visibility of revenues and sales pipeline • Continued focus on organic growth, supplemented by Operating review selective acquisitions • Continued development of our overs