MITIE Group PLC · LSE:MTO

MITIE — H1 FY22 Earnings Presentation

31 slides from MITIE's earnings presentation, Nov 18, 2021

  1. Slide 1: Mitie Group plc Half Year FY22 Results Presentation

    Mitie Group plc The UK’s Leading Facilities Management Company “Encouraging H1 performance; steady progress towards delivering our new margin-enhancing growth strategy” Half Year FY22 Results Presentation 18 November 2021

  2. Slide 2: H1 FY22 Highlights

    H1 FY22 Highlights • Strong financial performance • Mitie standalone revenue growth1 of 36% and underlying revenue back at pre-COVID levels • Record cash generation at £86m; dividend payment reinstated at 0.4p per share • Interserve Facilities Management (Interserve) performing well with integration

  3. Slide 3: Financial update

    Financial update Simon Kirkpatrick Chief Financial Officer

  4. Slide 4: Strong H1 performance boosted by Interserve acquisition and COVID-related contracts

    Strong H1 performance boosted by Interserve acquisition and COVID- related contracts Continuing operations (£m) H1 FY22 H1 FY21 Change % • Revenue doubled due to Revenue1 1,912 943 103% Interserve and COVID-related Mitie standalone revenue2 1,283 943 36% projects Operating profit before other items

  5. Slide 5: Underlying revenue growth of 12%, excluding COVID works and Interserve

    Underlying revenue growth of 12%, excluding COVID works and Interserve Continuing operations (£m) H1 FY22 H1 FY211 Change % • Business Services 9% underlying Business Services 775 445 74% growth, supplemented by COVID- related contracts Central Government & Defence 288 - n.a (CGD) • CGD ‘like for li

  6. Slide 6: Improved profitability across all divisions

    Improved profitability across all divisions • Business Services good underlying2 trading, Continuing operations (£m) H1 FY22 H1 FY211 Change % boosted by higher margin COVID contracts Business Services 65.2 20.9 212% • CGD ahead of expectations due to Central Government & Defence 14.9 - n.a addition

  7. Slide 7: First half profit doubled, before the inclusion of COVID-related profit

    First half profit doubled, before the inclusion of COVID-related profit Underlying trading +£22.9m 1 NB: Before other items from continuing operations 1 £37.4m is a year on year movement between £40.3m in H1 FY22 and £2.9m in H1 FY21 7

  8. Slide 8: Balance sheet further strengthened, with Group moving to a net cash position

    Balance sheet further strengthened, with Group moving to a net cash position £m H1 FY22 FY21 H1 FY21 • Significant improvement in net assets due to Interserve acquisition and free cash flow Net assets 428 362 253 generation Average daily net (debt)/cash (60) (47) (69) • Average daily net debt improv

  9. Slide 9: Continued improvement in average daily net debt

    Continued improvement in average daily net debt, driven by cash backed profits and working capital inflow • Significant improvement in average daily net debt over the last 2 years • Min to max of £155m represents normalised timing differences H1 H1 Net debt (£m) FY21 FY22 FY21 Closing net 8 (87) 116

  10. Slide 10: Strong free cash flow, despite ongoing investment in Interserve integration and Forté

    Strong free cash flow, despite ongoing investment in Interserve (ISV) integration and Forté Cash flow (£m) H1 FY22 H1 FY21 • Strong free cashflow from increased Operating profit before other items profits and working capital 85.0 18.2 (continuing operations) improvement Add back: depreciation, amort

  11. Slide 11: Underlying working capital improvement from reduction in DSO

    Underlying working capital improvement from reduction in DSO Payables increase of £55.1m DPO up 2 days to 28 days • £31.2m cash inflow from working capital in HY22 • Increased revenues drove £34m increase in Receivables increase of £0.2m receivables DSO 3 days better at 27 days • Strong working capi

  12. Slide 12: Strong first half performance, on track to deliver FY22 operating profit in line with guidance

    Strong first half performance, on track to deliver FY22 operating profit in line with previous guidance H1 performance • Positive underlying1 revenue growth, and cash-backed profits • Good progress on Interserve integration and synergies • Strong free cash flow generation and working capital perform

  13. Slide 13: Strategic update

    Strategic update Phil Bentley Chief Executive

  14. Slide 14: Strategy: Our margin-accretive growth strategy will deliver significant free cash flow

    Strategy: Our margin-accretive growth strategy will deliver significant free cash flow in the medium term Grow Mitie Capability Enablers • Grow core organically • “Great place to work” • Access client capital spend • Decarbonisation (Projects) • Science of Service • Infill M&A in high growth sectors

  15. Slide 15: Growth – mid single digit: We are winning new contracts, and retaining and growing

    Growth – mid single digit: We are winning new contracts, and retaining and growing existing contracts… £881m1 TCV new contract wins £287m projects £m • New wins in H1 £m H1 FY21 H1 FY22 • 52% increase in 120 New wins FY22 > FY21 100 Technical Services 1,000 • £646m1 for CGD 80 projects including 10%

  16. Slide 16: Growth: upweighted sales team focused on pipeline developments and sector specialisation

    Growth – mid single digit: …with an upweighted sales/business development team focused on pipeline developments and sector specialisation Dedicated sales approach £13.3bn high quality pipeline £bn • Incentives / KPIs aligned to Group-wide 14 12.9 13.3 Operating value • Pipeline includes £1bn at BAFO

  17. Slide 17: Growth: M&A investment in Telecoms, Decarbonisation and Intelligent Security

    Growth – mid single digit: …overlaid with M&A investment in higher growth/margin sectors of Telecoms, Decarbonisation and Intelligent Security • Acquisitions to secure DAEL Ventures technology or service • DAEL Ventures focused on Acquisition, Design, Construction of mobile infrastructure • Mitie Te

  18. Slide 18: Margin Enhancement: Interserve synergies

    Margin Enhancement - Delivering 150-200bps improvement: from Interserve synergies… Technology Integration People Integration • AX12 successfully migrated to SAP, networks migrated at • 27,500 Interserve employees transferred to Mitie 55 locations platforms & payroll • 91% of Interserve billing proce

  19. Slide 19: Reducing Interserve contract losses, operational excellence, third party spend, overhead savings

    Margin Enhancement - Delivering 150-200bps improvement: …reducing Interserve contract losses and bringing in operational excellence, third party spend disciplines and new overhead cost saving initiatives … Fix loss making Interserve contracts (10-15bps) Control of £1.4bn of third party spend (30-40b

  20. Slide 20: Margin enhancement: Forté savings in FY23

    Margin enhancement – Delivering 150-200bps improvement: …and from Forté (which remains on budget despite extended testing to year end) with 30-40bps savings in FY23 THE PROGRAMME HAS MOVED FROM BUILD INTO EXTENDED TEST PERIOD, WITH LAUNCH DESIGN AND BUILD OF SYSTEMS AND APPLICATIONS COMPLETE 1 APRIL

  21. Slide 21: Capability Enablers: Great Place to Work

    Capability Enablers: We continue to make good progress in our goal to become a “Great Place to Work” New initiatives H1 FY22 Diversity Awards • 24/7 virtual GP 50% Mitie Board female • Access to Free Flu vaccinations 13% Board ethnically diverse • Free Shares to all UK employees • Share Incentive Pl

  22. Slide 22: Capability Enablers: Delivering 2025 Zero Carbon ambitions and decarbonisation

    Capability Enablers: Delivering our 2025 Zero Carbon ambitions and partnering on decarbonisation… Leveraging Mitie’s Expertise Delivering significant decarbonisation savings for our customers Carbon Zero Carbon Zero Waste Biodiversity Gain Sustainability Compliance & Installed solar PV at 15 185,000

  23. Slide 23: Capability Enablers: 'Science of Service' for post-COVID workspaces

    Capability Enablers: ‘Science of Service’ for post-COVID workspaces Security Hygiene Services Technical Services ‘Driving intelligence’ ‘Driving innovation’ ‘Putting data into action' Global Security Operations Centre Creation of a Cleaning & Hygiene Centre Creating the ‘Amazon of FM’ of Excellence

  24. Slide 24: Summary: Encouraging H1 performance and medium-term targets

    Summary: Encouraging H1 performance; with steady progress towards delivering our new margin-enhancing growth strategy Targets • Encouraging start to the year Revenue growth mid-single digit 12%1 in H1 FY22 • Improved cash generation and low debt EBIT margin 4.5%-5.5% • Stable balance sheet to fund i

  25. Slide 25: Appendix

    Appendix

  26. Slide 26: A new divisional structure with dedicated operational expertise

    A new divisional structure with dedicated operational expertise designed to deliver future growth Continuing operations H1 FY22 H1 FY211 Mitie excluding Healthcare Business Services Mitie excluding Healthcare + Interserve B&I contracts Central Government & Defence (CGD) Interserve CGD Nil Interserve

  27. Slide 27: Business Services

    Business Services £m H1 FY22 H1 FY21 Change £m Change % Security 571.9 307.5 264.4 86% Cleaning 203.1 137.9 65.2 47% Total revenue 775.0 445.4 329.6 74% Operating profit before other items 65.2 20.9 44.3 212% Margin 8.4% 4.7% - 3.7ppt 27

  28. Slide 28: Central Government & Defence

    Central Government & Defence £m H1 FY22 H1 FY21 Change £m Change % Central Government 171.2 - 171.2 n.a. Defence 116.7 - 116.7 n.a Total revenue 287.9 - 287.9 n.a. Inc Joint Ventures and Associates Operating profit before other items 14.9 - 14.9 n.a. Margin 5.2% - - n.a. 28

  29. Slide 29: Communities

    Communities £m H1 FY22 H1 FY21 Change £m Change % Campus & Critical 28.9 - 28.9 n.a Education 93.3 53.4 39.9 75% Healthcare 108.1 31.5 76.6 243% Total revenue 230.3 84.9 145.4 171% Operating profit before other items 11.1 5.3 5.8 109% Margin 4.8% 6.2% - (1.4)ppt 29

  30. Slide 30: Technical Services

    Technical Services £m H1 FY22 H1 FY21 Change £m Change % Maintenance 378.0 250.7 127.3 51% Engineering Projects 66.5 56.9 9.6 17% Total revenue 444.5 307.6 136.9 45% Operating profit before other items 12.7 3.0 9.7 323% Margin 2.9% 1.0% - 1.9ppt 30

  31. Slide 31: Specialist Services

    Specialist Services £m H1 FY22 H1 FY21 Change £m Change % Care & Custody 60.4 50.7 9.7 19% Landscapes 19.9 20.7 (0.8) (4%) Spain 54.3 - 54.3 n.a Waste 39.7 33.5 6.2 19% Total revenue 174.3 104.9 69.4 66% Operating profit before other items 11.1 9.5 1.6 17% Margin 6.4% 9.1% - (2.7)ppt 31

Mitie Group — H1 FY22 Earnings Presentation on 6ix