MITIE Group PLC · LSE:MTO
MITIE — FY2018/19 Earnings Presentation
43 slides from MITIE's earnings presentation, Jun 6, 2019
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
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',
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
Slide 4: Financial review FY 18/19
Financial review FY 18/19 Paul Woolf, CFO
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
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.
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
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
Slide 9: Operating profit bridge
Operating profit bridge 1 1 1 Continuing operations before other items 9
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
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
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
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
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
Slide 15: Strategic review and outlook
Strategic review and outlook Phil Bentley, CEO
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
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
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
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
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
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
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
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
Slide 24: Transformation learnings over past two years
Transformation learnings over past two years • Complexity • Talent • Sales • IT investment • Client expectations • Culture 24
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
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
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
Slide 28: Q&A
Q&A mitie.com
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
Slide 30: Appendices
Appendices Mitie.com
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
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
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
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
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
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
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
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
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
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
Slide 41: Revenue visibility FY 19/20
Revenue visibility FY 19/20 Order book stable vs. last year 41
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
Slide 43: mitie.com
mitie.com Mitie Group ple | The exceptional, every day