Mitie Group Plc · LSE:MTO
Mitie — FY2012 Earnings Presentation
47 slides from Mitie's earnings presentation, May 21, 2012
Slide 1: MITIE Group PLC Full year results presentation
MITIE Group PLC A transformational 25th year, strong organic growth anda record order book Full year results presentation 21 May 2012
Slide 2: Excellent financial performance
Excellent financial performance Revenue +5.9% £2,002.5m (2011: £1,891.4m) Operating profit before other items* +7.2% £111.7m (2011: £104.2m) Earnings per share before other items +0.0% 22.6p (2011: 22.6p) Dividend per share +6.7% (2011: 9.0p) Basic earnings per share +10.2% 20.5p (2011: 18.6p) Opera
Slide 3: Highlights of the year
Highlights of the year + Sector-leading organic revenue growth of 5.4% + Organic growth in operating profit before other items* 6.7% * Delivered on our strategy with a series of transformational contract awards + Total potential value of six major contracts awarded ranges from £1.5bn to £2.2bn - Inc
Slide 4: Enablers for growth
Enablers for growth ¢ Significant order book and sales pipeline + 83% of 2013 budgeted revenues secured (prior year: 81%) + £8.6bn order book (up £1.8bn from 2011) + £11.2bn sales pipeline (2011: £11.4bn) ¢ Sector-leading integrated facilities and energy management proposition will underpin further
Slide 5: The outsourcing market evolves
The outsourcing market evolves
Slide 6: Transformational contract awards
Transformational contract awards - Private Sector + Lloyds Banking Group + Cumbrian Collaboration + Diageo ¢ Public Sector + Ministry of Justice + Essex County Council + West Midlands Construction Framework - Energy Services + Addenbrooke's + Cardenden + O-Gen Plymtrek
Slide 7: Private sector awards and renewals
Private sector awards and renewals - Key contracts retained and expanded Lloyds Banking Group: £775m to £930m over 5-6 years Integrated facilities, property and energy management One of our first clients in 1987 c3,000 people transferring to MITIE (total c7,000 people) Cumbrian Collaboration: £200m
Slide 8: Private sector opportunities
Private sector opportunities - 41% of the group's contracts are still single service contracts - expect a further shift to multi-service and integrated contracts * Opportunities to repeat the growth achieved with Lloyds, Rolls-Royce and others, with a number of our existing clients over the short to
Slide 9: Public sector awards and renewals
Public sector awards and renewals - Key contracts awarded and retained/expanded Ministry of Justice: £200m to £455m over 5-7 years Total facilities management contracts for HMCTS in the South of England + Brixton and Isis Prisons Appointed to the MoJ's Minor Works Framework in April 2011 Essex Count
Slide 10: Public sector opportunities
Public sector opportunities + Justice + Mo) pipeline of up to £1bn, markets include: - Total facilities management, prisons management, community payback, probation trusts + Home Office market opportunities: police services and immigration removal centres - Her Majesty's Prison Service: entered a pa
Slide 11: International strategy progress
International strategy progress + Rolls-Royce pan-European contract to deliver total facilities and energy management developing well + Total 2012 revenues were c£80m + Acquired the remaining 50% of the equity share capital of Service Management International (SMI) in July 2011 + Provides an improve
Slide 12: Following our clients overseas
Following our clients overseas Top 100 clients 72% EMEA 43% International clients 57% UK clients 20% Americas 8% Asia Pacific 11
Slide 13: Energy awards
Energy awards - Key development NHS Carbon and Energy Fund: £200m framework Accepted as a partner in the capital fund Enables Trusts to upgrade their energy infrastructure to save energy, carbon, money May 2012 - appointed preferred bidder to develop a major new innovation centre to power the world
Slide 14: The converging forces are well established in the market
The converging forces are well established in the market Low carbon 13
Slide 15: The drivers are in place for growth
The drivers are in place for growth * Renewable Heat Incentive * Feed in Tariffs * Green Gas Certificate A new * Renewable Obligation Generation * Climate Change Act Corilicates of Assets * CRC Energy Efficiency Scheme * EU regulations 1233/2010 * CERT/CESP/CCL/CSH * Building Regulations | fi Energy
Slide 16: The UK energy services market is forecast to grow rapidly
The UK energy services market is forecast to grow rapidly 2011 2014 2020 Energy Consultancy & Compliance Utility Procurement & Data Management Energy Retrofit (incl. renewables) Supply & Performance Contracting Total Market 15
Slide 17: Our energy services proposition
Our energy services proposition Decentralised ae jaising ie aay ness: Renewable energy E nergy SS Innovative Services ~~ h. / \ S consumption / <q 7 management reduction 34% of group revenue 16
Slide 18: Order book
Order book +£1.8bn A series of transformational contract awards and retentions this year have increased our yN secured order book by: +26% to £8.6bn 17
Slide 19: Sales pipeline of £11.2bn
Sales pipeline of £11.2bn Financial and 10% Professional services Retail Property Management Manufacturing Technology and Communications Utilities Transport and Logistics Leisure Construction 5% 6% 4% 2% 2% 6% 2% 3% 21% 18% 1% 12% 5% 3% Private 40% Hi HB Public 60% Central Government Local Governmen
Slide 20: Revenue by market sector
Revenue by market sector Financial and 16% Professional services 7% Central government 4% Local government Retail 10% 1% Other government Property Management 6% 11% Social Housing Manufacturing 10% 4% Health Technology and 6% Communications 8% Education Utilities 6% Transport and 7% Logistics Leisur
Slide 21: Real time information
real time information Recent investment has been focused on: A project to re-engineer all of our processes to make them electronic over the next two years accessi b | e 24/7 Client-facing management information suite that provides comprehensive asset performance data and enables the most efficient,
Slide 22: The MITIE Model
The MITIE Model Continue to grow business and develop career with giowth MITIE buys out £ employee stake Strong track record of success >95% Limited company integrated in to MITIE Create a business FEW 21
Slide 23: Equity models support growth and innovation
Equity models support growth and innovation Launched a £10m Entrepreneurial Fund in January 2011 to expand the MITIE model - nearly £5m already invested: + Technical Facilities Services + Ireland - Business Services outside London + Events and Leisure + Awarded soft FM services contracts at 02 Arena
Slide 24: Acquisitions
Acquisitions Utilyx + Acquired in January 2012 + Manages the business impact of energy consumption and rising energy costs - including strategic planning, procurement and risk management + Purchases a significant proportion of the UK corporate energy market on behalf of clients across industrial, co
Slide 25: Excellent financial performance
Excellent financial performance Revenue +5.9% £2,002.5m (2011: £1,891.4m) Operating profit before other items* +7.2% £111.7m (2011: £104.2m) Earnings per share before other items +0.0% 22.6p (2011: 22.6p) Dividend per share +6.7% (2011: 9.0p) Basic earnings per share +10.2% 20.5p (2011: 18.6p) Opera
Slide 26: Continuing track record of growth
Continuing track record of growth Revenue (£m) Basic EPS before other items* (p) 21.7pps £1,720m 17.2pps 14.9pps 2008 2009 2010 2011 2012 2008 009 2010 2011 2012 * Excludes non recurring pension credit of £4.1m in 2011 25
Slide 27: Summary financial results
Summary financial results FY 2012 FY 2011 Growth % Revenue (£m) 2002.5 1891.4 5.9% Operating profit before other items (£m)* 111.7 104.2 7.2% Operating profit margin* 5.6% 5.5% 0.1pp Profit before tax and other items (£m) 104.5 105.7 (1.1%) Effective tax rate before other items 23.8% 25.0% (1.2)pp B
Slide 28: Financial indicators
Financial indicators KPI Target FY 2012 FY 2011 Conversion of EBITDA to Over 80% of Group EBITDA converted cash to cash 83.7% 86.7% Operating profit margin Maintain operating margins between 5.6% 5.5% before other items* 5.0% - 6.0% ee , Capital expenditure Maintain below 2.0% 1.3% 1.4% we Broadly i
Slide 29: £1.8bn growth to £8.6bn
£1.8bn growth to £8.6bn Record order book, up by 26% 83% 81% 78% 74% a 2008 2009 2010 2011 2012 maFY Order book £bn ==Secured Revenue % 28
Slide 30: Strong growth of 5.9%
Strong growth of 5.9% Segmental revenue Revenue (£m) FY 2012 FY 2011 Growth% Facilities Management 937.3 882.2 6.2% Technical Facilities Management 472.8 437.1 8.2% Property Management 524.3 509.7 2.9% Asset Management 68.1 62.4 9.1% Total group 2,002.5 1,891.4 5.9% 29
Slide 31: Strong growth of 7.2%
Strong growth of 7.2% Segmental operating profit Operating profit before 5 5 0 other items (£m)* FY 2012 FY 2011 Operating profit 61g Facilities Management Margin % 6.6% Technical Facilities Operating profit 260 Management Margin % 5.7% Operating profit 20.2 Property Management Margin % 3.9% Operati
Slide 32: Developing margin
Developing margin Operating profit before other items* margin remains strong 5.6% > 5.5% + 5.4% + 5.3% + 5.6% 5.5% 5.2% + 5.4% 5.3% 5.1% ca 5.0% 2009 2010 2011 2012 * Excludes non recurring pension credit of £4.1m in 2011
Slide 33: Finance costs
Finance costs £m FY 2012 FY 2011 Interest on bank deposits 0.4 0.2 Other interest receivable - 0.2 Total interest received 0.4 0.4 Interest on bank loans 2.0 1.7 Interest on PP 3.7 1.1 Facility Fees 1.5 0.3 Funding costs 7.2 3.1 Finance lease Interest 0.4 0.3 Movement in respect of derivative financ
Slide 34: Other items
Other items £m FY 2012 FY 2011 Amortisation (acquisition related) 9.1 8.9 Integration costs - 48 Acquisition costs 1.8 0.3 Restructuring cost of Property Management - 48 Deferred consideration not paid (0.9) - Total Other items included in operating profit 10.0 18.8 Unwinding of discount on deferred
Slide 35: Acquisitions
Acquisitions - Acquisition of 100% of Utilyx Holdings Limited, an energy consultancy, for total consideration of up to £16.4m - Earn out of five minority companies for £14.6m, paid in 5.3m MITIE shares and £2.0m cash. New shares issued were offset by a share buyback + Increased stake in Service Mana
Slide 36: Strong balance sheet
Strong balance sheet £m FY 2012 FY 2011 Goodwill and other intangible assets 413.5 397.7 Other non-current assets* 105.1 80.0 Current assets* 512.8 475.6 Current liabilities* (475.8) (454.2) Non-current liabilities* (32.4) (24.6) Net debt (106.9) (76.5) Net assets 416.3 398.0 * Excluding cash and fu
Slide 37: Provisions
Provisions Deferred contingent Insurance : A Total consideration Reserve At 1 April 2011 45 8.2 12.7 Amounts recognised in the income statement (0.9) (1.1) (2.0) Deferred contingent consideration settled during (3.8) 7 (3.8) the period Utilised within the captive insurance subsidiary - (2.7) (2.7) A
Slide 38: No significant pension deficit
No significant pension deficit £m Group scheme Other schemes Total Pension assets 120.7 10.7 131.4 Pension obligations (137.9) (10.6) (148.5) Contract adjustment - (0.2) (0.2) Deficit (17.2) (0.1) (17.3) % of group net assets 4.2% + Triennial review and actuarial valuation of the group’s principal d
Slide 39: Mobilisation costs
Mobilisation costs Investment in organic growth H1 11/12 H2 11/12 Recognised Recognised in income in income 2011 Additions statement Additions statement + MITIE defines mobilisation costs as those costs incurred after appointment of preferred bidder but <1 year 7.3 prior to commencement of services
Slide 40: Cash conversion
Cash conversion Excellent conversion of 83.7% - Above the stated KPI of 80% cash conversion” 97.57% 90.3% : 95.27% 86.7% 83.7% 2008 2009 2010 2011 2012 mam EBITDA Cash Conversion % me=Cosh generated from operations *Cash conversion is defined as the conversion of Earnings Before Interest, Tax, Depre
Slide 41: Cash flow and net debt
Cash flow and net debt Low leverage with net debt of £106.9m, at 0.81x EBITDA £m FY 2012 FY 2011 Opening net debt (76.5) (86.6) Operating cash flows 133.5 112.9 Movement in working capital (23.3) (10.4) Cash generated by operations 110.2 102.5 Tax and other operating items (34.4) (16.8) Acquisitions
Slide 42: Long-term facilities to fund growth
Long-term facilities to fund growth Facility maturity profile Amount Cost Repayment Core banking facilities - from July 2011 £250.0m LIBOR +130-225bp Sep-15 Overdraft £40.0m Base rate + 100-175bp On demand $48.0m fixed at 3.88% $96.0m Dec-17 US private placement loan notes $48.0m at € LIBOR + 126bp
Slide 43: Strong sustainable profitable growth
Strong sustainable profitable growth Revenue 2009 2010 2011 2012 Operating profit before other items* 2008 2009 2010 2011 2012 * Excludes non recurring pension credit of £4.1m in 2011 Basic EPS before other items* 21.7p 17.2p 2008 009 2010 2011 2012 Dividend per share T T T T 2008 2009 2010 2011 201
Slide 44: Outstanding track record of growth
Outstanding track record of growth £0.0bn Revenue 1988 1992 1996 2000 2004 2008 2012 Basic EPS before other items* Opps 1988 1992 1996 2000 2004 2008 2012 * Excludes non recurring pension credit of £4.1m in 2011 43
Slide 45: Share price growth well ahead of FTSE
Share price growth well ahead of FTSE 100 £p (FISE rebased to MTO from 01/04/02) 350 —MTO —FTSE100 —FTSE250 300 250 200 0 T T T T T T T T T T 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 44
Slide 46: Highlights of the year
Highlights of the year + Sector-leading organic revenue growth of 5.4% + Organic growth in operating profit before other items* 6.7% * Delivered on our strategy with a series of transformational contract awards + Total potential value of six major contracts awarded ranges from £1.5bn to £2.2bn - Inc
Slide 47: Outlook
7 Outlook “TTT \\NS - Well-positioned to increase market share in outsourcing and energy services + Market-leading integrated FM capabilities will drive further organic growth with existing client base + Energy proposition supports every key energy issue faced by our clients * Selective internationa