Mears Group Plc · LSE:MER
Mears — FY2004 Earnings Presentation
22 slides from Mears's earnings presentation, Dec 31, 2004
Slide 1: Preliminary Results 31 December 2004
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Preliminary Results 31 December 2004 Bob Holt Chairman Stuart Black Chief Operating Officer David Robertson Finance Director
Slide 2: Content
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Content • Highlights • Financial review • Market opportunity, order book and contract awards • Strategy • Summary • Appendix
Slide 3: Highlights of the Year
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Highlights of the Year • £526m of new contracts won • 41% organic growth in turnover • 5% core margin in second half year • Record order book of £815m • Cash inflow of £0.9m • Management team strengthened
Slide 4: Financial Highlights
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Financial Highlights • Turnover £173.7m UP 54.7% • Profit pre goodwill £7,438k UP 41.9% • Earnings per share* 9.04p UP 39.7% • Dividend 1.90p UP 40.7% * Full tax, pre goodwill
Slide 5: Segmental Analysis
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Segmental Analysis £’000 Turnover EBITA 2004 2003 2004 2003 Maintenance 162,770 99,574 7,048 4,627 Vehicle collection 10,915 12,697 458 534 173,685 112,271 7,506 5,161
Slide 6: Operating Margin Pre Goodwill
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Operating Margin Pre Goodwill H1 4.7% H2 5.0% 2004 2003 Maintenance 4.9% 5.0% Scion 1.0% 0.5% Vehicle collection 4.2% 4.2% Total 4.3% 4.6%
Slide 7: Profit and Margin
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Profit and Margin Profit and margin 8,000 6 7,000 5 6,000 £’000 4 5,000 % 4,000 3 3,000 2 2,000 1 1,000 0 0 2000 2001 2002 2003 2004 Profit pre goodwill % Operating margin
Slide 8: Operating Cash Flow
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Operating Cash Flow 2004 2003 Operating profit 6,838 4,727 Depreciation & amortisation 1,779 1,161 Stocks / WIP (2,043) (1,069) Debtors (5,235) (3,461) Creditors 5,325 3,333 Operating cash flow 6,661 4,691 78% of EBITDA conv
Slide 9: Cash Flow
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Cash Flow 2004 2003 Opening funds 1,901 5,566 Operating cash flow 6,661 4,691 Interest (71) 81 Tax (1,312) (1,543) Capital expenditure (2,529) (826) Acquisitions (1,088) (5,388) Dividends (864) (623) Financing 120 (57) Net m
Slide 10: Balance Sheet
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Balance Sheet 2004 2003 Fixed assets : intangible 10,406 12,273 tangible 4,450 3,093 investments 48 107 14,904 15,473 Stocks 4,628 2,487 Debtors 30,410 24,875 Cash 8,078 3,408 Current liabilities (38,624) (28,600) Net curren
Slide 11: Impact of IAS
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Impact of IAS • Goodwill not amortised but subject to impairment review • Share-based incentives charged to P&L • Dividends recognised when paid
Slide 12: Key Business Drivers
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Key Business Drivers • Outsourcing of local government services • Partnership ethos • Size and duration of contract awards • Personal social responsibility
Slide 13: Social Housing Market
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Social Housing Market • Repairs & maintenance market sustainable at £5bn p.a. • Top 10 providers deliver only 13% of market • 1.8m houses still below Decent Homes Standard • Decent Homes programme extending to 2015
Slide 14: Forward Order Book
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Forward Order Book Forward order book £815m £815m Consensus forecast 200 turnover secured 2005 81% 150 2006 60% 2007 48% 2002 100 2003 2004 50 0 2005 2006 2007 2008 2009 2010 2011 on
Slide 15: Major New Contract Awards in 2004
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Major New Contract Awards in 2004 Sheffield 7 years £200m Newcastle 6 years £60m Peterborough 5 years £25m Carrick / N Cornwall 5 years £18m Hackney 5 years £37m Wolverhampton 5 Years £23m Ealing 5 Years £27m
Slide 16: Strategy
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Strategy • Reinforce market leadership position through - Order book growth - Service delivery innovation - Brand development - Commitment to the communities we serve • Selective acquisitions to support geographic growth • C
Slide 17: Summary 2004
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Summary 2004 • Profits, EPS and dividend all up 40% • £526m order intake • Record £815m order book “The strategy for further growth is clear and the spirit within the Group is better than ever.”
Slide 18: Appendix
IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Appendix MEARS GROUP PLC
Slide 19: Turnover
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Turnover 2004 2003 Original business 145,519 103,177 Acquisitions in 2003/04 Scion 21,977 7,687 Powersave 3,487 858 Painting Companies 2,702 549 Total 173,685 112,271 Organic growth 41.0%
Slide 20: Balance Sheet Key Movements (£m)
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Balance Sheet Key Movements (£m) Acquisitions 1.2 Impact of 41% organic growth 5.4 Debtor ,creditor efficiency gains (1.5) Other (1.0) Increase in net assets 4.1
Slide 21: Profit pre goodwill - half year split
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. Profit pre goodwill - half year split Profit Pre Goodwill – Half Year Split 4,500 4,000 3,500 3,000 £’000 £'000 2,500 2,000 1,500 1,000 500 2002 H1 2002 H2 2003 H1 2003 H2 2004 H1 2004 H2
Slide 22: EPS Pre Goodwill - Half Year Split
MEARS GROUP PLC IMPROVING HOMES, IMPROVING NEIGHBOURHOODS, IMPROVING LIVES. EPS Pre EPSGoodwill* - Half pre goodwill* - half Year Split year split 6 5 4 Pence 3 2 1 0 2002 H1 2002 H2 2003 H1 2003 H2 2004 H1 2004 H2 * Normalised