Mitie Group Plc · LSE:MTO
Mitie — H1 2019/20 Earnings Presentation
29 slides from Mitie's earnings presentation, Nov 21, 2019
Slide 1: Mitie Group plc Analyst Presentation H1 19/20
Mitie Group plc The UK’s leading Facilities Management business Analyst Presentation HI 19/20 21 November 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 HI 19/20 Paul Woolf, CFO Financial review HI 19/20 Phil Bentley, CEO Strategic review and outlook Q&A 3
Slide 4: Financial review H1 19/20
Financial review H1 19/20 Paul Woolf, CFO 4
Slide 5: Positive progress in H1 against our financial objectives
Positive progress in H1 against our financial objectives Growing business: • Revenue1 up 11% (2% organic growth2) • Operating profit1,3 up 5% Commercial success • Order book1 increased by 1% • Secured our largest recent IFM win and renewed our largest customer through to end of 2024 Balance sheet st
Slide 6: Financial summary
Financial summary H1 19/201 H1 18/191 Movement Income statement £m £m £m % Revenue 1,078.0 971.6 106.4 11.0 Operating profit2 33.0 31.3 1.7 5.4 Operating profit margin2 3.1% 3.2% (0.1) ppt Profit before tax and other items 24.9 23.8 1.1 4.6 Other items (10.3) (11.8) 1.5 Profit before tax 14.6 12.0 2
Slide 7: Revenue
Revenue H1 19/201 H1 18/191,2 Movement Top 50 customers underlying growth of 4%4 £m £m £m % - Maintenance 371.8 361.5 10.3 2.8 Improved performance in strategic accounts and new wins - Engineering Projects 86.8 81.3 5.5 6.8 Large projects & strategic accounts offset by weakness in Roofing - Internat
Slide 8: Operating profit
Operating profit H1 19/201 H1 18/191,2 Movement £m £m £m % Growth in strategic accounts partially offset by lower Technical Services 25.8 25.3 0.5 2.0 renewal margins Positive contribution from VSG offset by lower renewal Business Services 16.9 18.3 (1.4) (7.7) margins. Decline in operating profit d
Slide 9: Operating profit bridge
Operating profit bridge Technology, procurement and strategic account management Growth offset by lower margin renewals 1 1 1 Continuing operations before other items 9
Slide 10: Cash flow
Cash flow H1 19/20 H1 18/19 Working capital movements H1 19/20 H1 18/19 Variance £m £m £m £m £m Large projects (10) (9) (1) Operating cash flow before WC1 48.6 20.6 Underlying / seasonal (21) (43) 22 Working capital movement - trading (31.0) (52.0) WC - trading (31) (52) 21 Working capital movement
Slide 11: Average daily net debt continues to reduce
Average daily net debt continues to reduce Average net debt reduction driven by: £54m £m decrease M&A 30 Invoice discounting (4) Paying suppliers quicker (20) Other factors 48 Total 54 Other factors include: • Reduced overdue receivables • Improved speed of processing (payables and receivables) We’v
Slide 12: Total financial obligations continue to reduce
… and total financial obligations (TFO1) continue to reduce £138m Other key debt metrics: decrease Debt covenants H1 19/20 FY 18/19 Covenant Leverage 1.5x 1.3x <3.0x Interest cover 8.7x 8.8x >4.0x Working capital H1 19/20 FY 18/19 H1 18/19 Trade debtor days 27 29 28 Trade creditor days (50) (50) (65
Slide 13: Other items
Other items Other items £m Continuing operations Project Forte (4) Project Helix (2) Acquisition and disposal related costs (1) Amortisation of intangibles (1) Other (2) Other items before tax (Continuing) (10) Discontinued operations Acquisition & disposal related costs (1) Gain on disposal 52 Othe
Slide 14: IFRS 16
IFRS 16 • IFRS 16 implemented using modified retrospective Income statement impacts £m approach Reclassification of operating lease rentals 11.6 • Cumulative effect of adoption through opening Depreciation of lease assets (11.2) adjustment, comparatives not re-stated Increase in operating profit 0.4
Slide 15: Strategic review and outlook
Strategic review and outlook Phil Bentley, CEO 15
Slide 16: Half-way through five-year transformation, moving to Accelerated Value Creation
We are half-way through the five-year transformation of Mitie… moving to Accelerated Value Creation FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 Phase 1: Build Foundations Phase 11: Accelerated Value Creation • Reversed revenue declines • Market leadership and SAM growth in core • Cost savings re-in
Slide 17: Market Leadership is our focus in Phase II
CUSTOMER Market Leadership is our focus in Phase II Technical Services1 Business Services2 Specialist Services • Build technology-based value • Technology underpins: Global • Niche markets and strong margins proposition and Service Security Operations Centre and • Good top-line growth Operations Cen
Slide 18: Our Strategic Account Management is transforming customer service
CUSTOMER Our Strategic Account Management is transforming customer service Trusted partner for strategic accounts: Contract performance • 9%1 growth in strategic accounts • Extended transformational partnership • Connected Workspace focused on Strategic Accounts with Lloyds Banking Group and moved t
Slide 19: Distinctive client facing technology in Technical Services
CUSTOMER TECHNOLOGY …backed by distinctive client facing technology in Technical Services Improved outcomes for customers from technology-backed solutions TECHNICAL SERVICES 3D asset Service Consistent capture Operations & actionable Centre reporting & insight Customer Informed Data-driven interface
Slide 20: Data and analytics at the core of security
CUSTOMER TECHNOLOGY …with data and analytics at the core of security Risk Data Feeds Retail Local Crime Intelligence & Incident Data benefits*: Automated CCTV & Alarms Algorithmic • 5% reduction Risk Scoring Security Teams in shrink Security Onsite SECURITY Officers Technology • 5% reduction Stock L
Slide 21: Simplifying internal processes through automation
TECHNOLOGY COST Simplifying internal processes through automation Robotic process automation API gateways • Optical character recognition • Secure, simple systems • Invoice matching and integration, starting with payroll exception reduction • “Plug & Play” customer • Automated billing enablement • B
Slide 22: Project Forte: transforming Work Flow delivery in Technical Services
TECHNOLOGY COST Project Forte: transforming Work Flow delivery in Technical Services… Go live Nov 2019 Dec 2010 Maximo 7.6 design, build • 90% of processes Maximo mapped and being core coded Technical Readiness implemented Maximo Maximo / SAP Interface design, build, test • 50%+ complete to SAP for
Slide 23: Driving significant opex savings
TECHNOLOGY COST … together, driving significant opex savings Project Forte £m One-off cost of implementing Project Forte over 2 years (30) 3% of operating hours Benefits: Productivity 9 42% Service centres 4 of Service Centres cost Supply chain 7 Revenue leakage 3 5% of subcontractor spend Back offi
Slide 24: Cementing our cultural transformation under The Mitie Way
PEOPLE Cementing our cultural transformation under “The Mitie Way” • Licence to Operate and Licence to Lead – a One Mitie approach to Learning & Development • Celebration Hub – a one-stop shop for reward and recognition • Talent Hub to mine external and mobilise internal talent • Social Value and Re
Slide 25: Maintaining our medium-term guidance
PHASE II: ACCELERATED VALUE CREATION With Mitie now in a stronger shape, we are maintaining our medium-term guidance • Focus on core portfolio and Strategic Account Management will underpin revenue growth FY 19/20 guidance • Organic revenue growth broadly in line with H1 19/20 • Technology benefits
Slide 26: Questions
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Slide 27: Appendices
Appendices Mitie.com
Slide 28: Daily net debt (pre-IFRS 16)
Daily net debt (pre-IFRS 16) Net debt (£m) H1 19/20 Period end (pre-IFRS 16) 148.1 IFRS 16 adjustment 87.8 Period end (post IFRS 16) 235.9 28
Slide 29: Mitie.com
Mitie.com Mitie Group ple | The exceptional, every day