Mitie Group Plc · LSE:MTO
Mitie — Investor Presentation (2015)
30 slides from Mitie's investor presentation, 2015
Slide 1: Mitie – the strategic outsourcing company
Mitie – the strategic outsourcing company Helping clients to run more efficient and effective businesses by looking after their facilities and the people they’re responsible for
Slide 2: Overview
Overview FTSE 250 70,000+ 64%:36% support services employees: top 20 private sector business UK private sector public sector employer £2.3bn * £130m * £9.0bn operating profit Order book revenue * Headline results for the year ended March 2015 Investor Presentation 2015 2
Slide 3: The shape of our business
The shape of our business Facilities Management £1,901m Hard FM Soft FM £621m £1,280m Revenue £2.3bn Property Management £273m Facilities Management £1,786m (Headline results for the year ended March 2015) Healthcare £91m Investor Presentation 2015 3
Slide 4: Mitie strengths
Mitie strengths • Business with a clear focus on services • Ability to attract great, entrepreneurial people • Market leader in UK facilities management • High quality client base in diversified end markets • Stable and predictable revenue streams • Profits underpinned by excellent cash generation •
Slide 5: Diversified revenue base
Diversified revenue base 2015 Revenue by sector Private sector 64% Public sector 36% Finance and 17% 11% Social housing professional services 7% Local government Retail 12% Manufacturing 10% 7% Central and other government Transport and 7% logistics 6% Health Technology and 6% 5% Education communica
Slide 6: High quality client base
High quality client base Investor Presentation 2015 6
Slide 7: Market leading FM business
Market leading FM business • UK facilities management market leader: current share of c£75bn outsourced FM market in the UK is c3% – potential to grow share • FM revenues grew by over 50% in the past five years; margins in that time grew from 5.5% to 6.0% • Excellent portfolio of integrated FM refer
Slide 8: The UK FM market has evolved
The UK FM market has evolved In-house Single Bundled Integrated services services FM A range of Broader cost Integrated delivery – one specialist single savings client contact services Synergies Significant synergies between service Management team Shift employed by Mitie lines Standardised Data and
Slide 9: Driving strong growth in integrated contracts
Driving strong growth in integrated contracts Headline group revenue £bn 2.5 2.0 32% 13% 31% 26% 1.5 58% 46% 33% 29% 30% 1.0 0.5 42% 41% 41% 40% 38% 0.0 2011 2012 2013 2014 2015 Integrated Bundled Single • >50% of revenues derived from top 100 clients (2014: 40%) • Single service contracts continue
Slide 10: Selective international presence
Selective international presence • Continue to work outside UK with selected large clients • Expansion into Ireland and growth of business has been successful • Niche acquisition of Dalkia FM in Norway provides a growing presence • Risk and return metrics in the Eurozone make this market unattractiv
Slide 11: Property Management
Property Management • 2015 Revenue £273m (12% of group total) • Acceleration in revenues in H2, however market conditions put pressure on margins • Operates solely in the housing market delivering a wide range of property related services • Service >200,000 homes across the UK • Increasing trend tow
Slide 12: Healthcare
Healthcare • 2015 Revenue £91m (4% of group total) • 6,000 carers providing 80,000 hours of care in the home across the South of England and Wales • Current market environment is challenging • Pricing environment under pressure as a result of local authority funding cuts, leading to unsustainable pr
Slide 13: The Mitie Model: backing entrepreneurs
The Mitie Model: backing entrepreneurs • Shared ownership model: Mitie 51% / management team 49% • 112 started since Mitie started; 95% success rate • Mitie Model businesses have broadened capability in FM, eg. business services, client services, compliance, catering and events • Attracts high-quali
Slide 14: Strategic focus
Strategic focus Long- term Acquisition Business area Strategy organic potential growth potential • Remain the UK market leader in integrated FM and continue growing with existing No acquisitions of Facilities clients 5 to 10% scale required – Management • Further grow our specialist single-service b
Slide 15: Financial strategy underpins business strategy
Financial strategy underpins business strategy Current year organic growth guidance range 3-8% Strong organic revenue growth � Long-term target of 5-10% per annum Target operating profit margins of 6% - Cost efficiency through scale Grow operating profit margin � - High quality contracts and a sel
Slide 16: Strong financial performance
Strong financial performance Headline Revenue, £m Headline Operating Profit, £m 2015 FY 2,266 2015 FY 128.6 2014 FY 2,143 2014 FY 127.5 2013 FY 1,981 2013 FY 120.3 2012 FY 1,826 2012 FY 112.6 2011 FY 1,891 2011 FY 108.3 Headline Operating Profit Margin Headline Cash Conversion 2015 FY 5.7% 2015 FY 9
Slide 17: Exceptional revenue visibility
Exceptional revenue visibility Secured Order book Revenue* £bn % 10 87 9 85 8 85% 85% 7 84% 83 83% 6 81 5 81% 79 4 3 77 6.8 8.6 9.2 8.7 9.0 2 75 2011 2012 2013 2014 2015 * Per cent of budgeted revenues secured for the following financial year as at 31 March Investor Presentation 2015 17
Slide 18: Excellent EBITDA conversion consistently generates cash
Excellent EBITDA conversion consistently generates cash 127.8% 126.5% 100.0 130.0% 107.3% 90.0 110.0% 86.7% 83.7% 80.0 90.0% 70.0 70.0% 60.0 50.0% 50.0 30.0% £87.7m £72.0m 40.0 10.0% 30.0 £62.9m £57.5m -10.0% 20.0 £48.5m -30.0% 10.0 -50.0% - -70.0% 2011 2012 2013 2014 2015 Free cash flow Cash conver
Slide 19: Sector-leading organic revenue growth
Sector-leading organic revenue growth % Revenue Growth 12 Acquisitive Organic 10 8 3.4 3.0 6 7.9 0.5 0.9 4 5.4 5.0 5.2 4.9 2 2.1 0 2011 2012 2013 2014 2015 Investor Presentation 2015 19
Slide 20: Strong balance sheet enables growth
Strong balance sheet enables growth 250 1.6x 1.3x 1.3x 200 1.2x 1.1x 0.8x 150 0.6x 0.6x £192m £187m 100 0.1x £178m 50 £107m -0.4x £77m - -0.9x 2011 2012 2013 2014 2015 Net debt Gearing (Net debt: Headline EBITDA) Investor Presentation 2015 20
Slide 21: Superior returns on capital
Superior returns on capital 18.6% 16.8% 16.6% 16.5% 16.9% 8.0% 8.2% 7.0% 6.8% 7.4% 2011 2012 2013 2014 2015 ROCE WACC ROCE = Post Tax Headline Operating Profit/(Net Assets+Net Debt-Minority Interests) Adjusted for the proforma full year effect of acquisitions Investor Presentation 2015 21
Slide 22: Progressive dividend policy
Progressive dividend policy Dividend per share 2015 FY 6.4% increase 11.7p 2014 FY 11.0p 2013 FY 10.3p 2012 FY 9.6p 2011 FY 9.0p Five year CAGR 8.4% Investor Presentation 2015 22
Slide 23: Looking ahead with confidence
Looking ahead with confidence • Strong organic growth focus • Share ownership ethos remains at the heart of our group; entrepreneurial start-up model will support growth • Large order book of £9bn and excellent revenue visibility of 85% • Further market share growth • FM business is market-leading –
Slide 24: Appendix
Appendix 24
Slide 25: £9.7bn sales pipeline
£9.7bn sales pipeline Pipeline by sector As at 31 March 2015 Private sector 56% Public sector 44% Finance and 17% 15% Social housing professional services 18% Local government Retail 7% 4% Central and other Manufacturing 6% government Transport and 10% logistics 5% Health Technology and 1% 2% Educat
Slide 26: Key clients by business
Key clients by business Cleaning & environmental Royal Cornwall St George’s First Great Tesco Co-op services Hospitals Hospital Western Catering & front of house RBS Standard Life Channel 4 Olympia Co-op Security Heathrow Eurostar AWE UBS Eurotunnel Ashworth & Four Seasons Hard FM Heathrow Airport R
Slide 27: Key competitors by business
Key competitors by business Interserve/ Cleaning & environmental Initial OCS ISS Compass Servest services Cleaning Catering & front of house BaxterStorey Compass Sodexo Elior CH&Co Security G4S Securitas VSG/Compass ISS OCS Hard FM Interserve Integral Norland Carillion Cofely Integrated FM Carillion
Slide 28: FM revenue breakdown
FM revenue breakdown Cleaning and environmental services £360m Integrated FM £734m FM* Security revenue £214m £1.9bn Catering and front of house £114m *FM business comprises two divisions: Soft FM (2015 revenue: £1,901m), which includes cleaning and environmental services, security, catering and fro
Slide 29: Capital allocation – key priorities
Capital allocation – key priorities Acquire to Grow Reinvest for complement shareholder Maintain an efficient balance sheet growth organic growth returns Invest in our Limited to small, Grow dividends 1.2x net debt: headline EBITDA business using bolt-on at least in line as at 31 March 2015 working
Slide 30: Investor Relations: Erica Lockhart John Telling
Investor Relations: Erica Lockhart John Telling [email protected] [email protected] M: +44 (0) 7979 784488 M: +44 (0) 7979 701006