Mitie Group Plc · LSE:MTO
Mitie — Merger or Acquisition (November 2020)
17 slides from Mitie's merger presentation, Nov 4, 2020
Slide 1: Acquisition of Interserve Facilities Management (ISV FM)
Acquisition of Interserve Facilities Management (“ISV FM”) Creating the UK’s leading FM company Wednesday 4 November 2020
Slide 2: Progress since 25 June: Trading, Synergies and Revised Terms
Progress since 25 June: Trading, Synergies and Revised Terms • Better than expected Mitie trading to 30 September 2020 (revenue down 9.8%) • ⅔ COVID impact; ⅓ known contract losses • ISV FM showing similar revenue declines • ⅓ COVID impact; ⅔ known contract losses • Significantly better sales moment
Slide 3: Re-balancing the transaction terms improves the deal for existing Mitie shareholders
Re-balancing the transaction terms improves the deal for existing Mitie shareholders Original SPA Final Deal £’m TERP Current Mitie share price1 42.2p 28.2p Number of consideration shares (m) 358m 248m …31% reduction in shares received by ISV FM Value of share consideration to ISV shareholders £151m
Slide 4: Acquiring ISV FM has compelling strategic logic
Acquiring Interserve Facilities Management (ISV FM) has compelling strategic logic Enhances competitive Leverages Unlocks significant Generates £35m Increases free cash positioning with technology to growth through of cost synergies flow, margin and customers balancing deliver Digital Strategic Acco
Slide 5: We have continued to make strategic progress since 2017
We have continued to make strategic progress since 2017 Strategic pillar Customer Technology People Cost Strategy Market leadership and best in class Embed technology to differentiate our Strengthen balance sheet and margin Create ‘a great place to work’ customer NPS offering accretion • Investment
Slide 6: Enhances competitive positioning, balancing public and private sectors
Enhances competitive positioning, balancing public and private sectors Enlarged Mitie4 Interserve4 Mitie Greater scale, diversification and resilience Technology & Other Revenue1 £2,174m £1,310m £3,484m • 50% public sector communications (private sector) 5% focus inc. Defence, Property 4% Operating
Slide 7: Leverages technology investment to deliver Digital Transformation
Leverages technology investment to deliver Digital Transformation Award winning technology Introducing Mitie customer-facing technology to ISV FM customers will significantly enhance customer experience and improve retention rates • Remote monitoring of assets • Mozaic: Real-time MI • Global Securit
Slide 8: Significant growth through strategic accounts and developing our people
Significant growth through strategic accounts and developing our people Accelerate New Business Maximise Margin on Leverage Cross Sell Developing our People Wins Current Contracts • ISV FM has lower cross-sell • Mitie is subscale in • ISV FM contract margins are • Mitie investment in training Opport
Slide 9: We have identified increased synergies of c.£35m p.a. by FY23/24
We have identified increased synergies of c.£35m1 p.a. by FY23/242 • Automation of timesheet management through Workplace+ • Automated call centre, scheduling, billing applications through Forte • Moving to one self-service HR shared service Support function £13.2m Removing • Moving MS AX12 to Mitie
Slide 10: Achieving expected synergies has a c.£33m one-off cost
Achieving expected synergies has a c.£33m one-off cost Technology opex £3.0m • Expert IT resources to oversee separation, data migration and integration Technology and • ISV hardware upgrades to support Mitie EUC CE+ standards; roll out of customer IT investment IT capex £11.1m facing technology; sy
Slide 11: The PMO has been mobilised to deliver a successful integration
The PMO has been mobilised to deliver a successful integration Central Government Cities & • PMO team of 77 internal and external colleagues with & Defence Communities Business Services Specialist Services Technical Services Executive Leadership Team support IFM and Strategic Accounts • Full integra
Slide 12: Mitie's H1 FY20/21 trading performance more resilient than expected
Mitie’s H1 FY20/21 trading performance has been more resilient than expected, with Q2 better than Q1 Mitie £m 6 months ended 30 September 2020 • Q2 revenue of £514m is 12% ahead of Q1 revenue Revenue £m Revenue growth / (decline), % of £458m Group 972.4 (9.8%) • Excluding the MOJ and NHS Properties
Slide 13: Significantly improved free cash flow for Enlarged Group
Significantly improved free cash flow for Enlarged Group Mitie’s free cash flow over the past three years financed investments in technology, improving capabilities and customer service, ‘normalising the balance sheet’ and ‘other items’. We are now moving into a period of sustainable cash generation
Slide 14: Enlarged Group is suitably capitalised to deliver on strategic ambitions
Enlarged Group is suitably capitalised to deliver on strategic ambitions and weather COVID-19 The Enlarged Group well positioned for the Average period Net Debt (pre-IFRS 16) / 2.2x long term with a pro forma ratio of 1.2x Pro forma EBITDA (pre-IFRS 16) £400m of facilities in place to December 1.2x
Slide 15: Timetable / process
Timetable / process Expected Timetable Transaction conditions Publish Class 1 Circular and Completion of the Acquisition is subject to 4 November 2020 Prospectus 23 November 2020 General Meeting to approve Approval of the Class 1 transaction by Mitie at 11am acquisition shareholders 30 November 2020
Slide 16: Acquiring ISV FM has compelling strategic logic
Acquiring Interserve Facilities Management (ISV FM) – has compelling strategic logic Enhances competitive Leverages Unlocks significant Generates £35m Increases free cash positioning with technology to growth through of cost synergies flow, margin and customers balancing deliver Digital Strategic Ac
Slide 17: Q&A Creating the UK's leading FM company
Q&A Creating the UK’s leading FM company