Mears Group PLC · LSE:MER
Mears — H1 2016 Earnings Presentation
18 slides from Mears's earnings presentation, 2016
Slide 1: Results for the period ended 30 June 2016
Results for the period ended 30 June 2016 Investor presentation
Slide 2: Agenda
+ Agenda 2 n Highlights n Financial review n Housing - business update n Care - business update n Strategy and Outlook
Slide 3: H1 2016 key performance indicators
+ H1 2016 key performance indicators 3 Revenue Interim dividend Order book growth +8.4% +6.5% +9% £466.2m (2015: £430.0m) 3.30p (2015: 3.10p) £3.5bn (2015: £3.2bn) Profit before tax* EBITDA to cash conversion 2017 revenue visibility -5.5% 91% 85% £18.2m (2015: £19.2m) (2015: 92%) (2015: 85%) Operati
Slide 4: Highlights
+ Highlights 4 Solid financial performance q Excellent organic revenue growth in Housing Housing (84% of Group revenues) q Strong order in-take providing excellent visibility of 2016 q Successful period of new contract mobilisation and 2017 revenues q Broader service offering enhancing our growth q
Slide 5: Financial highlights
+ Financial highlights 5 Six months to June 2016 2015 n Solid first half year r Housing performing strongly Revenue £466.2m £430.0m r Margins impacted by contract mobilisations Profit before tax* £18.2m £19.2m r Care remains challenging Operating profit margin* 4.2% 4.7% n Strong balance sheet n Con
Slide 6: Income statement
+ Income statement 6 Six months to June 2016 (£m) 2015 (£m) Change Revenue 466.2 430.0 +8% Operating profit 19.9 21.1 -6% Long-term incentives (0.5) (0.7) Net finance expense (1.2) (1.2) Normalised profit before tax 18.2 19.2 -5% Acquired intangible amortisation (5.5) (4.5) Profit before tax 12.7 14
Slide 7: Housing performance
+ Housing performance 7 Six months to June 2016 2015 Change Housing management 10% Regen Revenue (£m) 389.6 366.5 6% 13% Housing Operating profit* (£m) 18.9 18.2 revenue £390m Operating margin (%) 4.8% 5.0% Maintenance Share of Group revenue 84% 85% *pre-amortisation and before long-term incentives
Slide 8: Housing - new mobilisations
+ Housing - new mobilisations 8 Number of Relationship First half-year new contracts New client Existing client 2008 2 2 0 n High number of new contracts 2009 2 1 1 successfully mobilised in H1 2016 2010 5 1 4 n Significant skew of new awards to 2011 5 1 4 new customer relationships which 2012 7 7 0
Slide 9: Care performance
+ Care performance 9 Six months to June 2016 2015 Change Revenue (£m) 76.6 63.5 21% Operating profit* (£m) 1.0 2.9 Operating margin 1.3% 4.6% Share of Group revenue 16% 15% * pre-amortisation and before share based payments and long-term incentive plan n Underlying organic revenues flat - increasing
Slide 10: Cash performance
+ Cash performance 10 12 months rolling to June 2016(£m) 2015(£m) n Continued strong working capital Operating profit* 37.7 44.2 management Depreciation and other amortisation 6.7 5.4 n Average debt £75m; range £65m to £90m EBITDA 44.4 49.6 n Average net debt to underlying EBITDA of 1.7x Cash inflow
Slide 11: Balance sheet
+ Balance sheet 11 At June 2016 (£m) 2015 (£m) Goodwill and acquisition intangibles 223.1 226.8 n Strong balance sheet Property, plant and equipment 19.5 16.8 Working capital assets 167.4 168.0 n Reduction in deferred consideration relates to Omega earn-out payments Working capital liabilities (182.
Slide 12: Guidance - 2016 and beyond
+ Guidance - 2016 and beyond 12 n Housing revenue growth of 5%-10% p.a. over medium term. Current year anticipated to be at top of this range n Revenue visibility for 2017 currently at 85%; target 95% by December 2016 n Housing; maintain margins within 5.7% - 6.0% range n Care; focused on quality of
Slide 13: Housing - business update
+ Housing - business update 13 n Increasing blurring of the boundaries around social, affordable ment • Call taking • Tenan and private rented housing t • Procure t Liai son gemen •B na usin a ess q Affordable housing - demand exceeding supply p ia rs m Estate Management sys te Re ms • q Private ren
Slide 14: Housing - business update (continued)
+ Housing - business update (continued) 14 n Successful period of new contract mobilisations; new contracts running ahead of plan n Increasing competitive advantage for Mears q Development of new innovative models q Clients acknowledge our differentiated and broader offering q Capitalising on reduce
Slide 15: Care - business update
+ Care - business update 15 n Increasing demographic, budgetary and political drivers of change n Driving operational and financial improvements; recruitment, retention, service delivery, compliance n Encouraging evidence of new commissioning models n Significant period of new contract mobilisations
Slide 16: Good visibility of future growth
+ Good visibility of future growth 16 2016 and 2017 revenue growth n Order book £3.5 billion (2015: £3.2 billion) n 2016 - revenue visibility of 98% of consensus forecasts* n 2017 - revenue visibility of 85% of consensus forecasts* Sales gap Milton Keynes phasing Care pruning 2016 mobilisations - Sa
Slide 17: Strategy and Outlook
+ Strategy and Outlook 17 n Significant opportunities in both markets q Immediate opportunities in Housing q Long-term outlook in Care n Housing (84% of Group revenues) q Continue to deliver solid growth in housing maintenance through providing ‘more of the same’ q Extend further scale and scope of
Slide 18: Legal disclaimer
Legal disclaimer This presentation contains forward-looking statements. These statements are made by the Directors in good faith based on the information available to them as at 18 August 2015 and will not be updated at any future point. These statements, by their nature, involve risk and uncertaint