MITIE Group PLC · LSE:MTO

MITIE — FY2018/19 Earnings Presentation

43 slides from MITIE's earnings presentation, Jun 6, 2019

  1. Slide 1: Mitie Group plc Analyst Presentation FY 18/19

    Mitie Group plc The UK’s leading Facilities Management business Analyst Presentation FY 18/19 6 June 2019

  2. Slide 2: Disclaimer

    Disclaimer This presentation may contain certain forward-looking statements, beliefs or opinions, including statements with respect to Mitie business, financial condition and results of operations. These forward-looking statements can be identified by the use of words such as 'anticipate', 'expect',

  3. Slide 3: Agenda

    Agenda FY 18/19 Financial review Paul Woolf, CFO FY 18/19 Strategic review and outlook Phil Bentley, CEO Q&A 3

  4. Slide 4: Financial review FY 18/19

    Financial review FY 18/19 Paul Woolf, CFO

  5. Slide 5: FY 18/19 financial highlights

    FY 18/19 financial highlights • FY 18/19 results show continued growth momentum • Organic revenue growth (excl. VSG) of 5.5% • Operating profit2 growth of 6.0% to £88.2m • Order book stable and pipeline is growing • Balance sheet strengthened • Net debt reduced to £141m (FY 17/18: £194m) • Leverage

  6. Slide 6: Financial summary

    Financial summary FY 18/191 FY 17/181 Movement £m £m £m % Revenue 2,221.4 2,030.6 190.8 9.4 Operating profit2 88.2 83.2 5.0 6.0 Operating profit margin2 4.0% 4.1% (0.1) ppt Profit before tax and other items 74.4 66.7 7.7 11.5 Other items (38.0) (82.1) 44.1 nm Profit/(loss) before tax 36.4 (15.4) 51.

  7. Slide 7: Revenue

    Revenue FY 18/191 FY 17/181,2 Movement • Organic revenue growth of 5% £m £m £m % • Top 50 customers grew ~8% Growth in top accounts including related project work Engineering Services 905.7 886.3 19.4 2.2 offset prior year losses Strong organic performance (+6%) together with part Security 536.5 432

  8. Slide 8: Operating profit

    Operating profit FY 18/191 FY 17/181,2 Movement £m £m £m % Strong performance in strategic accounts and efficiency Engineering Services 58.7 54.1 4.6 8.5 savings partly offset by investment into customers Continued good growth in profitability of underlying Security 30.7 27.5 3.2 11.6 business plus

  9. Slide 9: Operating profit bridge

    Operating profit bridge 1 1 1 Continuing operations before other items 9

  10. Slide 10: Cash flow

    Cash flow FY 18/19 FY 17/18 Free cash flow and movement in FY 18/19 FY 17/18 Operating cash flow £m £m net debt £m £m EBITDA continuing 107.7 106.2 Free cash flow 21.4 (32.8) Discontinued operations1,2 (20.0) 2.5 Acquisitions / disposals 43.5 (9.7) Pension deficit payments (10.5) (3.0) Dividends (14

  11. Slide 11: Underlying working capital reduced significantly in H2

    Underlying working capital reduced significantly in H2 FY 18/19 Movement in underlying working capital H1 H2 FY £m £m £m Movement in reported working capital (34) 42 8 FY 18/191 FY 17/181 Reduced invoice discounting 1 2 3 Trade receivable 29 26 days Paying our suppliers quicker / (slower) (19) 45 26

  12. Slide 12: Average daily net debt improved significantly in Q4

    Average daily net debt improved significantly in Q4 Net debt FY 18/19 FY 17/18 Movement Average daily net debt Period end (140.7) (193.5) 52.8 Disruption from Improvement in Average (302.0) (286.1) (15.9) £350m outsourcing collections and proceeds from M&A • Average daily net debt higher for full ye

  13. Slide 13: Financial scorecard

    Financial scorecard FY 18/19 Organic revenue +5.5% P Operating profit1 +6.0% P Operating profit margin1 0.1 ppt down ~ Off balance sheet finance > £30m reduction P 2 disposals Successful M&A 1 acquisition P Net debt - period end (£141m) P Net debt - average (£302m) ~ 1 Continuing operations before o

  14. Slide 14: Reporting schedule

    Reporting schedule Q1 update At the AGM – 30 July H1 results November Q3 update January FY results June Capital markets day at the end of the year 14

  15. Slide 15: Strategic review and outlook

    Strategic review and outlook Phil Bentley, CEO

  16. Slide 16: After 2 years our strategy is starting to deliver

    After 2 years – in a challenging market – our strategy is starting to deliver CUSTOMER PEOPLE • 2 years of like-for-like growth • Employee engagement up 12 • Top 50 strategic accounts ppts to 45% revenue up 8% • 2 top employer awards • NPS +12 (up 39 points in 2 years) FINANCIAL STABILITY TECHNOLOGY

  17. Slide 17: Customer service has improved significantly

    Customer service has improved significantly… TO P 5 0 I M PROV E M EN T HI G H PRO FI L E W I N S C USTO MERS REVENUE UP 8% +22 over 1 year points JOBS B ACKLOG 90K over DOW N (-60%)* 2 years +39 S T RO N G R E T E N T I ON points 2 0 1 9 NPS survey “ Mitie’s customer service is excellent. They make

  18. Slide 18: Improved pipeline from major framework awards

    … with improved pipeline from major framework awards CROWN COMMERCIAL SERVICES (GOVERNMENT) North of England FM framework Defence framework Security framework London University Commercial Procurement (RM3830) (RM6089) (RM6089) Purchasing Consortium Collaborative (NHS) From June 2018 - Due to launch

  19. Slide 19: Project Helix has delivered the two-year targeted cost savings

    Project Helix has delivered the two-year targeted cost savings 18/19 cumulative savings In-year cost of change Cumulative cost of change* £m FY Exit run-rate Capex Opex Capex Opex Project Helix 38 45 (8) (14) (21) (49) *Cost of change (capex and opex) FY 17/18 and FY 18/19 19

  20. Slide 20: … and improved our financial stability

    … and improved our financial stability 500 £m 444 451 • Leverage down from 1.8x 400 381 to 1.3x • Invoice discounting down 300 by £38m to £73m 200 • Supply Chain Finance down £20m to £20m 100 • At the same time we - FY 16/17 FY 17/18 FY 18/19 invested c.£60m to pay our Net debt Invoice discounting S

  21. Slide 21: We are creating a great place to work

    We are creating a great place to work Employee engagement improved to 45% from 33% last year following • Executive roadshows • ‘You Said, We Did’ campaign We introduced: • Single HR system: ‘People Hub’/SAP SuccessFactors • Learning & development cloud-based hub • Mitie behaviours supported by new M

  22. Slide 22: Technology is supporting Security leadership

    Technology is supporting Security leadership … with real-time MI improving NPS… >£50m revenue from Real-time Security technology solutions MI dashboards launched • Lone worker monitoring of 48,000+ devices MiTec* • 180,000+ identities managed through Sentinel competency management software • Initial

  23. Slide 23: Enabling predictive maintenance and Monitoring-as-a-Service

    … and enabling predictive maintenance and Monitoring-as-a-Service Normal functioning for a critical customer Mitie’s CW capabilities asset (stable low grade vibrations) offer preventive/predictive analytics benefiting: 1. MaaS / Predictive Customers PRODUCT CATALOGUE Maintenance • 24/7 monitoring of

  24. Slide 24: Transformation learnings over past two years

    Transformation learnings over past two years • Complexity • Talent • Sales • IT investment • Client expectations • Culture 24

  25. Slide 25: Mitie Phase II: focusing on larger businesses and strategic accounts

    Mitie Phase II: We are focusing on our larger businesses and strategic accounts to capture higher growth opportunities Trusted partner for strategic accounts Public sector Frameworks • Embedding Connected Workspace technology • FM, Defence, Security • Enhanced strategic account management • £4.1bn o

  26. Slide 26: Project Forte will drive a further £30m of gross cost savings

    Mitie Phase II: Project Forte will drive a further £30m of gross cost savings PROJECT FORTE: 2-year programme Gross run-rate savings by March 2021 Cost Engineering Services £25m (£25m) Group-wide initiatives £5m (£5m) TOTAL £30m (£30m) Engineering Services Group-wide initiatives • Service desk moder

  27. Slide 27: Outlook is improving as we move into Mitie Phase II

    Outlook is improving as we move into “Mitie Phase II” Firmly in the delivery and execution phase FY 19/20 guidance • Project Helix delivered key transformation programmes in HR, IT, • Organic revenue growth of Commercial and Finance to lay foundation of a solid business 3%-4% per annum – Gross run-r

  28. Slide 28: Q&A

    Q&A mitie.com

  29. Slide 29: Mitie @ mitie

    Mitie @ mitie OUR BUSINESS ENGINEERING WASTE CONNECTED WORKSPACE BR Over By recycling By recycling large new IFM contracts 52,500 van 400,000m?2 62, 304 == Z_ 3 934 ee and iwohed in 10 people of roofs refurbished , ca other deals tonnes Sg tonnes of OL). 3,106 secretes || ean 2 uy panier ve 12 new n

  30. Slide 30: Appendices

    Appendices Mitie.com

  31. Slide 31: Engineering Services

    Engineering Services FY 18/191 FY 17/181,2 Movement Summary £m £m £m % Revenue 905.7 886.3 19.4 2.2 Operating profit 58.7 54.1 4.6 8.5 Operating profit margin 6.5% 6.1% 0.4 ppt M A I N S E RV I C E LINES • Revenue driven by growth in top accounts and related project work which offset the impact • Ma

  32. Slide 32: Security

    Security FY 18/191 FY 17/181 Movement Summary £m £m £m % Revenue (Excl.VSG) 456.9 432.0 24.9 5.8 Revenue 536.5 432.0 104.5 24.2 Operating profit 30.7 27.5 3.2 11.6 M A I N S E RV I C E Operating profit margin 5.7 % 6.4 % (0.7) ppt LINES • Security • Underlying revenue growth following new sales wins

  33. Slide 33: Professional Services

    Professional Services FY 18/191 FY 17/181,2 Movement Summary £m £m £m % Revenue 131.4 131.2 0.2 0.2 Operating profit 5.6 5.6 - - Operating profit margin 4.3 % 4.3 % - M A I N S E RV I C E LINES • Rebalancing of portfolio towards higher-margin accounts: • Waste management - Withdrew from loss-making

  34. Slide 34: Cleaning

    Cleaning FY 18/191 FY 17/181,2 Movement Summary £m £m £m % Revenue 404.4 384.1 20.3 5.3 Operating profit 17.5 19.6 (2.1) (10.7) Operating profit margin 4.3 % 5.1 % (0.8) ppt M A I N S E RV I C E LINES • Prior year contract wins drove the top line performance within Cleaning and Healthcare • Cleaning

  35. Slide 35: Care & Custody

    Care & Custody FY 18/191 FY 17/181 Movement Summary £m £m £m % Revenue 107.3 59.9 47.4 79.1 Operating profit 3.9 1.9 2.0 105.3 Operating profit margin 3.6 % 3.2 % 0.4 ppt M A I N S E RV I C E LINES • Strong growth both at revenue and EBIT levels following the win and successful mobilisation • Immigr

  36. Slide 36: Catering

    Catering FY 18/191 FY 17/181 Movement Summary £m £m £m % Revenue 136.1 137.1 (1.0) (0.7) Operating profit 5.2 5.6 (0.4) (7.1) Operating profit margin 3.8 % 4.1 % (0.3) ppt M A I N S E RV I C E LINES • Positive revenue growth in G&G but overall division held back by weaker performance of • Catering e

  37. Slide 37: Operating profit margin

    Operating profit margin FY 18/191 FY 17/181,2 Movement % % ppt Engineering Services 6.5 6.1 0.4 ppt Security 5.7 6.4 (0.7) ppt Professional Services 4.3 4.3 - Cleaning 4.3 5.1 (0.8) ppt Care & Custody 3.6 3.2 0.4 ppt Catering 3.8 4.1 (0.3) ppt Divisional total 5.5 5.6 (0.1) ppt Corporate centre (1.5

  38. Slide 38: Balance sheet

    Balance sheet FY 18/19 FY 17/18 Movement £m £m £m Working capital assets 446.9 395.1 51.8 Working capital liabilities (663.8) (593.3) (70.5) Notes Working capital balances (216.9) (198.2) (18.7) • FY 18/19 and FY 17/18 individual balances Goodwill and intangibles 344.5 347.9 (3.4) are not directly c

  39. Slide 39: Daily net debt improved in H2

    Daily net debt improved in H2 (£400m) (317.4) (£300m) (294.6) (277.8) (286.6) (£200m) (193.5) (140.7) (£100m) Dec Jun Sep Jul Feb Apr Aug Nov Jan Oct May Mar FY 17/18 FY 18/19 H1 17/18 Average H2 17/18 Average H1 18/19 Average H2 18/19 Average 39

  40. Slide 40: Order book

    Order book • Order book stable at £4.1bn (includes £0.2 bn from VSG acquisition) • Good visibility on FY 19/20 budget with mid-term supported by continued sales momentum and strong pipeline (including government work) • Improved near-term visibility: Yr1 order book 12% higher than prior year • Decli

  41. Slide 41: Revenue visibility FY 19/20

    Revenue visibility FY 19/20 Order book stable vs. last year 41

  42. Slide 42: Other items

    Other items FY 18/19 Other items £m Redundancy payments (4.2) Cost of change team (0.7) Expenditure and provisions in respect of property closures (0.2) Dual running, outsourcing, costs of change, retention (10.0) Restructuring costs (15.1) Pension scheme s75 provision (20.0) Acquisition and disposa

  43. Slide 43: mitie.com

    mitie.com Mitie Group ple | The exceptional, every day

Mitie Group — FY2018/19 Earnings Presentation on 6ix