MITIE Group PLC · LSE:MTO
MITIE — H1 2013 Earnings Presentation
47 slides from MITIE's earnings presentation, Nov 19, 2012
Slide 1: MITIE Group PLC Interim Results 2012
MITIE Group PLC The strategic outsourcing company Presentation of the half-year results for the six months to September 2012 19 November 2012
Slide 2: Ruby McGregor-Smith CBE, Chief Executive
Ruby McGregor-Smith CBE Chief Executive MITIE Group PLC Interim results presentation 2012 2
Slide 3: Strong financial performance
Strong financial performance + 5.6% 83.1% Revenue (4.3% organic growth) Cash conversion £1,026.6m (2011: £971.7m) (2011: 81.0%) + 2.5% + 4.5% Operating profit before other items* Dividend per share £52.9m (2011: £51.6m) 4.6p (2011: 4.4p) 5.2% 98% Operating profit margin before other items* 2013 budg
Slide 4: Highlights
Highlights • Positive six months, with revenue growth of 5.6% (4.3% organic) • Continuing to deliver on our integrated facilities management strategy – Successfully mobilised major contracts including Lloyds Banking Group – Award of significant new contracts with Sky and Golding Homes • Strategic ac
Slide 5: Enablers for growth
Enablers for growth • Sector-leading outsourcing proposition will underpin further organic growth – Excellent client relationships drive organic growth – Differentiated by breadth of integrated services – Market-leading technology provides competitive edge • Significant order book and sales pipeline
Slide 6: UK outsourcing market evolution
UK outsourcing market evolution 1980 1990 2000 2010 2015 In-house Single service Bundled services Integrated FM Strategic outsourcing Security Broader cost savings Integrated delivery Buildings management and services M&E engineering Single point contact Management information Business process syste
Slide 7: Divisional performance
Divisional performance • Facilities Management – Performance is very strong – Successful mobilisation of Lloyds Banking Group contract from 1 August • Technical Facilities Management – IFM contracts performing well – Stronger second half expected • Property Management – Continues to be affected by w
Slide 8: Divisional performance
Divisional performance Operating Six months to 30 September 2012 Revenue profit before Margin other items £m £m % Facilities Management 518.1 35.3 6.8 Technical Facilities Management 230.7 11.6 5.0 Property Management 254.7 7.9 3.1 Asset Management 23.1 -1.9 -8.2 Total 1,026.6 52.9 5.2 MITIE Group P
Slide 9: Private sector
Private sector • Lloyds Banking Group – Successfully mobilised from 1 August – £775m to £930m over 5-6 years – Integrated facilities, property and energy management – Approximately 3,000 people transferred, bringing total to approximately 7,000 people across the contract • British Sky Broadcasting G
Slide 10: Public sector
Public sector • Golding Homes – Social housing contract to provide repairs and maintenance – Ten year contract with a total value expected between £70m and £120m – Supporting the upkeep of 6,000 properties across Kent • Scottish Government – Expanded a contract for integrated facilities management –
Slide 11: Acquisition of Enara
Acquisition of Enara • Healthcare is one of MITIE’s key public sector markets – Long-term focus on justice, healthcare, social housing and education • Home care is a natural fit for MITIE’s skill set and values – Managing, motivating and training a large, mobile workforce – Using technology and inno
Slide 12: Why home care?
Why home care? • Adult home care market is an ideal entry point into the healthcare market 1 – Home care market in England c£8bn , of total UK healthcare spend >£100bn – Number of adjacent market opportunities • Growing user base – The UK’s ageing population: number of people over the age of 85 is e
Slide 13: Enara
Enara A leading UK home care service provider • Fourth largest provider of home care in the UK 1. Saga Homecare 2. Carewatch 3. Mears • Market leader in the South of England − Operates 57 branches in England and Wales − Provides approximately 120,000 hours of care per week − 6,000 employees supporti
Slide 14: Enara – business model
Enara – business model • Offers a range of care models to provide services including: − Help with personal hygiene and dressing needs − Morning and night time help to get in and out of bed − Administration and assistance with medications − Liaison with clients’ GPs as required − Respite care for rel
Slide 15: Strong growth in order book
Strong growth in order book Increased by £1.0bn or 12.5% since September 2011 £8.6bn £9.0bn £8.0bn £6.4bn £6.8bn £4.9bn FY 2009 FY 2010 FY 2011 HY 2012 FY 2012 HY 2013 MITIE Group PLC Interim results presentation 2012 15
Slide 16: Secured revenues increasing
Secured revenues increasing 97% 98% 94% 95% 93% 72% 68% 62% 57% 58% HY 2009 HY 2010 HY 2011 HY 2012 HY 2013 Secured Revenue - Current Year Secured Revenue - Next Year MITIE Group PLC Interim results presentation 2012 16
Slide 17: Sales pipeline of £10.5 billion
Sales pipeline of £10.5 billion Finance and 8% 20% Central government professional services 14% Local government Retail 7% 1% Other government Property 7% management 11% Social housing Manufacturing 6% 9% Health Transport and 5% 4% Education logistics Construction 3% Technology and 2% communications
Slide 18: International strategy
International strategy • Clients taking a pan-European approach to procurement − Rolls-Royce pan-European contract to deliver total facilities and energy management operating in six European countries with total revenues of £80m (2012) • Acquired the FM business of Dalkia in Norway in June 2012 • Lo
Slide 19: Energy services
Energy services • Extensive energy services capabilities remain a key differentiator • Supports and complements the large integrated FM contracts, eg. Sky and Lloyds Banking Group • Utilyx has strengthened our offering by bringing strategic energy consulting capability • Accounted for 32% of group r
Slide 20: Bolt-on acquisitions and MITIE model
Bolt-on acquisitions and MITIE model • Continue to use the MITIE model and bolt-on acquisitions to enter new or niche markets • Creativevents – Leading UK independent events and leisure catering company – 51% stake for initial consideration of up to £6.0m • Dalkia FM Norway – Acquired the FM busines
Slide 21: Suzanne Baxter, Group Finance Director
Suzanne Baxter Group Finance Director MITIE Group PLC Interim results presentation 2012 21
Slide 22: Strong financial performance
Strong financial performance + 5.6% 83.1% Revenue (4.3% organic growth) Cash conversion £1,026.6m (2011: £971.7m) (2011: 81.0%) + 2.5% + 4.5% Operating profit before other items* Dividend per share £52.9m (2011: £51.6m) 4.6p (2011: 4.4p) 5.2% 98% Operating profit margin before other items* 2013 budg
Slide 23: Summary financial results
Summary financial results Highlights H1 2013 H1 2012 Growth Revenue (£m) 1,026.6 971.7 5.6% Operating profit before other items* (£m) 52.9 51.6 2.5% Operating profit margin before other items* 5.2% 5.3% (0.1pp) Net finance costs (£m) (4.1) (3.7) 10.8% Profit before tax and other items* (£m) 48.8 47.
Slide 24: KPIs in line with targets
KPIs in line with targets With record order book KPI Target H1 2013 H1 2012 FY 2012 Order book Growth in line with strategy £9.0bn £8.0bn £8.6bn Conversion of EBITDA to Over 80% of Group EBITDA 83.1% 81.0% 83.7% cash converted to cash Operating profit margin Maintain operating margins 5.2% 5.3% 5.6%
Slide 25: Facilities Management
Facilities Management Strong revenue and margin growth £m H1 2013 H1 2012 Growth Revenue 518.1 454.0 14.1% Operating profit before other 35.3 27.2 29.8% items* Margin 6.8% 6.0% 0.8pp *Other items are restructuring and acquisition related items MITIE Group PLC Interim results presentation 2012 25
Slide 26: Technical Facilities Management
Technical Facilities Management Well positioned for the future £m H1 2013 H1 2012 Growth Revenue 230.7 230.1 0.3% Operating profit before other 11.6 11.6 0.0% items* Margin 5.0% 5.0% 0.0pp *Other items are restructuring and acquisition related items MITIE Group PLC Interim results presentation 2012
Slide 27: Property Management
Property Management Challenging conditions, clear action taken £m H1 2013 H1 2012 Growth Revenue 254.7 249.7 2.0% Operating profit before other 7.9 11.4 (30.7%) items* Margin 3.1% 4.6% (1.5pp) *Other items are restructuring and acquisition related items MITIE Group PLC Interim results presentation 2
Slide 28: Asset Management
Asset Management Programme delays have affected short term results £m H1 2013 H1 2012 Growth Revenue 23.1 37.9 (39.1%) Operating profit before other (1.9) 1.4 N/A items* Margin (8.2%) 3.7% N/A *Other items are restructuring and acquisition related items MITIE Group PLC Interim results presentation 2
Slide 29: Operating profit margin
Operating profit* margin Margins maintained within target range Target margin range *Operating profit before other items, which are restructuring and acquisition related items MITIE Group PLC Interim results presentation 2012 29
Slide 30: Other items
Other items £m H1 2013 H1 2012 FY 2012 Restructuring costs* 4.8 - - Integration costs 0.2 - - Acquisition costs 1.8 - 1.8 Deferred consideration not paid - - (0.9) Amortisation of acquisition related 4.3 4.6 9.1 intangibles Total other items 11.1 4.6 10.0 * Restructuring costs reflect the restructur
Slide 31: Strong cash conversion and above target
Strong cash conversion* and above target Excellent conversion of EBITDA to cash of 83.1% 105.9 80% target * Cash conversion is defined as the conversion of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to operating cash on a rolling 12-month basis MITIE Group PLC Interim resu
Slide 32: Strong cash flow and balance sheet
Strong cash flow and balance sheet Supports future growth £m H1 2013 H1 2012 FY 2012 Opening net debt (106.9) (76.5) (76.5) Operating cash flows 61.0 61.7 133.5 Movement in working capital (29.9) (26.7) (23.3) Cash generated by operations 31.1 35.0 110.2 Tax and other operating items (15.9) (18.3) (
Slide 33: Good progress on acquisitive growth
Good progress on acquisitive growth • Niche bolt on acquisitions of Creativevents and Dalkia FM in Norway. Maximum consideration £13.1m - £6.3m cash paid, remainder deferred • Three MITIE Model earnouts – maximum consideration £14.7m - 4.4m MITIE shares, £1.4m cash and £1.4m deferred consideration •
Slide 34: Enara meets acquisition criteria
Enara meets acquisition criteria Highlights Acquisition criteria Proforma 2013 Revenue £93.0m Operating profit before £10.1m other items Integration costs £5.0m Order book Quality clients, recurring revenue £0.2bn Conversion of EBITDA to Meets group target >80% >80% cash Operating profit margin At l
Slide 35: New funding supports Enara acquisition
New funding supports Enara acquisition Funding Funding - short term bridge then Consideration refinanced via US PP Loan Notes £110.8m EBITDA multiple 10.5x MITIE Group gearing Medium term target max 2x EBITDA <2.0x WACC post acquisition Projected to fall by 0.5% 7.1% Return on capital post tax 10.0%
Slide 36: Continued, sustainable profitable growth
Continued, sustainable profitable growth *Before other items (restructuring and acquisition related items) as set out in the slide “Other items” ** Excludes non recurring pensions credit of £4.1m in 2011 MITIE Group PLC Interim results presentation 2012 36
Slide 37: Ruby McGregor-Smith CBE, Chief Executive
Ruby McGregor-Smith CBE Chief Executive MITIE Group PLC Interim results presentation 2012 37
Slide 38: Highlights
Highlights • Positive six months, with revenue growth of 5.6% (4.3% organic) • Continuing to deliver on our integrated facilities management strategy – Successfully mobilised major contracts including Lloyds Banking Group – Award of significant new contracts with Sky and Golding Homes • Strategic ac
Slide 39: Outlook
Outlook • Tough economic climate and continuing challenges within our more cyclical markets • Well-positioned to increase market share in outsourcing – Market-leading integrated FM capabilities will drive further organic growth with existing client base – Quality home care acquisition provides platf
Slide 40: Appendix
Appendix MITIE Group PLC Interim results presentation 2012 40
Slide 41: Outstanding track record of growth
Outstanding track record of growth Revenue Basic EPS before other items* £2.0bn 23pps £1.6bn 17pps £1.2bn 11pps £0.8bn 6pps £0.4bn £0.0bn 0pps 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 *Other items are restructur
Slide 42: Facility maturity profile
Facility maturity profile Long term facilities to support growth Amount Cost Repayment Core banking facilities £250.0m LIBOR +130-225bp Sep-15 Overdraft £40.0m Base rate + 100-175bp On demand $48.0m fixed at 3.88% US private placement $96.0m Dec-17 $48.0m at £ LIBOR + 126bp loan notes £40.0m Fixed a
Slide 43: Strong balance sheet
Strong balance sheet £m H1 2013 H2 2012 FY 2012 Goodwill and other intangible assets 416.7 395.9 413.5 Other non-current assets* 105.9 87.7 105.1 Current assets* 542.9 484.5 512.8 Current liabilities* (479.4) (426.8) (475.8) Non-current liabilities* (39.9) (32.4) (32.4) Net debt (132.9) (119.3) (106
Slide 44: Movement in net assets
Movement in net assets £m H1 2013 H1 2012 FY 2012 Opening balance 416.3 398.0 398.0 Total comprehensive income 26.1 25.0 59.5 Shares issued 15.1 13.4 20.6 Dividends paid (18.4) (17.3) (32.8) Purchase of own shares (held in EBT) (6.5) (7.4) (7.4) Share buybacks - (9.1) (12.4) Share based payments (in
Slide 45: Mobilisation costs
Mobilisation costs Investment in organic growth Mobilisation costs Mobilisation Costs Ageing £m H1 2013 H1 2012 FY 2012 £m 25 Opening balance 21.0 15.4 15.4 20 15 Costs capitalised 3.5 2.8 12.0 10 5 Costs amortised (3.7) (2.6) (6.4) - H1 2013 H1 2012 FY 2012 Closing balance 20.8 15.6 21.0 < 1 year 1
Slide 46: No significant pension deficit
No significant pension deficit £m Group scheme Other schemes Total Pension assets 123.0 11.1 134.1 Pension obligations (142.5) (10.4) (152.9) Contract adjustment - (0.4) (0.4) Deficit (19.5) 0.3 (19.2) % of group net assets 4.6% • Triennial review and actuarial valuation of the group’s principal def
Slide 47: Provisions
Provisions • Provisions comprise contingent deferred consideration and the group’s insurance reserve • Contingent deferred consideration increased from £1.2m to £8.4m in the period, primarily due to £6.8m of deferred contingent and earnout consideration on the acquisition of Creativevents • The grou