Slide 1: 2015 Results Presentation
2015 Results Presentation Charles Skinner, Chief Executive Adam Councell, Group Finance Director 10 March 2016
Slide 2: Highlights
Highlights ● Group revenue up 36% to £91.9m (2014: £67.5m) Document Management revenue up 46%; operating profit up 31% Relocation revenue up 24%; operating profit up 24% ● Group adjusted profit before tax up 36% to £16.3m (2014: £12.0m) ● Adjusted earnings per share up 27% to 15.6p (2014: 12.3p)
Slide 3: Financial Review
Financial Review
Slide 4: Consolidated Income Statement (adjusted)
Consolidated Income Statement (adjusted) Continuing operations 2015 2014 Change Revenue (£m) 91.9 67.5 36% Adjusted operating profit (£m) * 17.6 12.9 36% Finance costs (£m) (1.3) (0.9) 44% Adjusted PBT (£m) * 16.3 12.0 36% Standard tax charge 20.25% 21.5% Adjusted profit for period (£m) * 13.0 9.4 3
Slide 5: Document Management
Document Management 2015 2014 Change Revenue (£m) 54.7 37.4 46% Operating profit (£m) 15.1 11.5 31% Operating margin 28% 31% -300bps ● Revenue includes full year impact of Cintas and other 2014 acquisitions ● Organic growth solid in core business. Cintas organic growth affected by known terminations
Slide 6: Relocation
Relocation 2015 2014 Change Revenue (£m) 37.2 30.1 24% Operating profit (£m) 4.1 3.3 24% Operating margin 11% 11% - ● Results include part year trading for ITP acquired in July 2015 ● Strong organic growth in Harrow Green helped by contribution from MOD contract ● Relocom had an excellent year, IT E
Slide 7: Exceptional costs
Exceptional costs £m 2015 2014 Box relocation and associated costs 0.1 0.4 Restructuring costs 5.1 2.5 Transaction costs 0.4 0.4 Other exceptional costs 0.8 (0.2) Total exceptional costs 6.4 3.1 ● Cintas Restructuring largely complete Overall cost in line with expectations More scanning restruct
Slide 8: Cash Flow
Cash Flow 2015 £m 2014 £m Adjusted EBITDA after exceptionals 14.0 11.7 Core working capital 1.6 (0.3) Post acquisition working capital/property provisions (3.6) (3.9) Growth working capital (1.0) (1.9) Net cash from operations 11.0 5.6 Capex (4.0) (3.6) Interest/Tax (1.9) (1.9) Acquisitions/Disposal
Slide 9: Balance Sheet and Debt Facilities
Balance Sheet and Debt Facilities 2015 2014 £m £m Non-current assets 160.3 103.3 Trade and other current assets 30.5 25.3 Cash and cash equivalents 8.5 6.9 Current Assets 39.0 32.2 Trade and other current liabilities (25.4) (16.8) Financial liabilities – borrowings (3.7) (3.7) Current liabilities (2
Slide 10: Financial Summary
Financial Summary ● Revenue up 36% driven by acquisitions and underlying growth ● Operating margins in Records Management and Relocation remained steady ● Leverage at year end 2.1x adjusted proforma EBITDA. Falling below 1.5x following sale of Wincanton Ireland ● Operating cash flow up 96% ● Signifi
Slide 11: Operational Review
Operational Review
Slide 12: Operational Review – Records Management
Operational Review – Records Management ● Established business box growth: 6% ● Capacity utilisation at year end (exc. Wincanton): >90% ● Cintas integration complete ● New capacity being developed at Wiltshire mine and Upper Heyford ● Ancora and DIAA acquisitions integrated, Diamond boxes being move
Slide 13: Operational Review – Scan
Operational Review – Scan ● Comprises primarily old Cintas scan business ● Limited contribution due to Operational weakness on largest contract Major contracts delayed ● Changes made New divisional MD appointed New Scan MD appointed Peterborough partially closed 2 other sites closed (Han
Slide 14: Operational Review – Shred
Operational Review – Shred ● Inadequate revenue to generate contribution ● New Divisional MD appointed ● New IT system installed ● Strong organic growth maintained ● Operating well below capacity Preliminary Results for the year to 31 December 2015 13
Slide 15: Operational Review - Harrow Green and Other Relocations
Operational Review - Harrow Green and Other Relocations ● Year-on-year growth in revenues and margins ● Both London and regional market strong ● Major MoD contract operated smoothly in first year ● Relocom traded well, helped by close links to Harrow Green ● IT Efficient steady ● ITP Group performed
Slide 16: Wincanton Acquisition
Wincanton Acquisition
Slide 17: Deal summary
Deal summary ● £57.3m consideration ● Revenues to March 2015: UK £14.8m Republic of Ireland £7.6m Total £22.4m ● Occupancy rate: UK 69% Dublin 75% Preliminary Results for the year to 31 December 2015 16
Slide 18: Integration
Integration ● Less complex than Cintas ● Senior management redundancies completed ● Transfer of Charlton boxes to Rainham commenced and new racking being installed ● Forecast capacity utilisation by end 2016: > 90% ● No net box growth expected in UK in Year 1 Preliminary Results for the year to 31 D
Slide 19: Wincanton Ireland Sale
Wincanton Ireland Sale ● Purchase consideration €36m (c. £28m) ● Net purchase consideration for UK business now c. £30m ● No scope for operating synergies in Ireland ● Limited local knowledge ● Restore focus is on mainland UK ● Slightly earnings dilutive in short term ● Capital available for growth
Slide 20: Business strategy
Business strategy
Slide 21: Our strength
Our strength ● Focus on UK office services ● Focus on business streams with certain characteristics ● Continuing increased market penetration ● Strong margins ● Earnings visibility ● Huge scope for further growth by acquisition “A business with an economic moat” Preliminary Results for the year to 3
Slide 22: Customer Penetration
Customer Penetration ● 60% of FTSE 100 companies ● 72% of top 100 UK legal practices ● 96% of top 25 UK accountancy companies ● 41% of UK National Health Service trusts ● 41% of local authorities in England, Scotland and Wales Preliminary Results for the year to 31 December 2015 21
Slide 23: Business stream characteristics
Business stream characteristics ● Growth through acquisition and market consolidation ● Competitive advantage through UK focus and market knowledge ● Group-wide cross-selling opportunities ● Complex and mission-critical operational services ● Strong, predictable recurring revenues and high customer
Slide 24: Growth/Share Matrix of Restore business
Growth/Share Matrix of Restore business Market Share Cash Cow Star Market Dog ? Growth Preliminary Results for the year to 31 December 2015 23
Slide 25: Outlook
Outlook
Slide 26: Outlook
Outlook ● Near-term focus on: Cost and capacity synergies from Wincanton acquisition Continuing to improve the performance of Shred and Scan Ensuring newer activities benefit from cross-selling opportunities ● Strategy of organic and acquisitive growth to continue ● The current year has starte