125
YEARS OF
FORWARD
THINKING
Mouchel Annual Results 2013
Grant Rumbles, Chief Executive
Paul Rayner, Finance Director
GRANT RUMBLES
CHIEF EXECUTIVE
Agenda
• Introduction
• Financial Review
• Business Review
• Our Strategy
• Summary and Outlook
3MouchelAnnual Results 2013
Introduction
• Restructuring programme completed in March 2013
• Delivering on all strategic objectives with demonstrable
evidence of profitability
• Strong and appropriately financed balance sheet
• Excellent performance against all KPIs and significant contract wins
4MouchelAnnual Results 2013
FINANCIAL REVIEW
PAUL RAYNER
GROUP FINANCE
DIRECTOR
Results
Revenue
Operating Profit
EBITDA
Interest
Profit Before Tax
Cash In/(Out) Flow From
Operations
Net Debt
2013
£m
555.3
28.1
37.0
[7.3]
20.8
39.3
2012
£m
49.9
1.1
1.8
[0.4]
0.7
[6.3]
• Results ahead of budget expectations
45.5
40.1
• £12m on EM acquisition
• EBIT margin of 5.1%
• EBITDA margin of 6.7%
• Interest cover of 5 times on EBITDA
• Strong cash from operations
• Net debt/EBITDA 1.2 times
All measures are underlying
6MouchelAnnual Results 2013
Divisional Performance
2013
£m
2012
£m
Revenue
Infrastructure Services
Mouchel Business Services
Total
387.9
167.4
555.3
31.3
18.6
49.9
EBIT
Infrastructure Services
Mouchel Business Services
Unallocated Corporate Cost
EBIT
EBITDA
28.3
5.3
[5.5]
28.1
37.0
1.8
1.2
[1.9]
1.1
1.8
EBIT Margin %
EBITDA Margin %
5.1%
6.7%
2.2%
3.6%
7MouchelAnnual Results 2013
Infrastructure Services
• EBIT margin – 7.3%
• EBITDA margin – 8.0%
• Strong margins across the business
• Expectation of continued margin
growth
Mouchel Business Services
• EBIT margin – 3.2%
• EBITDA margin – 6.8%
• High depreciation charge in 2013
• Challenging business environment
Cash Flow
Operating Profit
Depreciation
Working Capital In/(Out) Flow
Underlying Operating Cash
Capex
Net Cash From Operations
2013
£m
28.1
8.9
2.3
39.3
[3.8]
35.5
2012
£m
1.1
0.7
[8.1]
[6.3]
–
[6.3]
• Strong cash flow resulting from
strong working capital control
• Conversion of EBITDA to underlying
cash 106%
• Conversion of EBITDA to net
cash 96%
• All metrics compare favourably
to peer group
• Modest capex requirements ongoing
8MouchelAnnual Results 2013
Other Cash Flows
Deficit Pension Contributions
Other Pension Costs
Restructuring Costs
Acquisition of EM (incl. costs)
2013
£m
4.3
5.1
10.7
12.9
2012
£m
0.6
–
1.0
–
• Agreed 25-year deficit reduction
plan with Trustees
– £4.3m deficit contributions until 2017
– Increasing after 2017
• Other Pension costs – high PPF levy £2.5m,
other fees £2.6m high level reducing in 2014
• Restructuring costs completed in FY13
started in early 2012 under “old” Group
– £3m anticipated in 2014 empty space and
MBS final restructuring
• Acquisition of EM in February 2013
– £25m cost with £13m of cash acquired
– Represents just over 1 times
EBITDA multiple
– Debt to acquire EM repaid in year
9MouchelAnnual Results 2013
Analysis of Borrowings
Gross Debt
RCF
Cash
Net Debt
2013
£m
60.0
21.2
[35.7]
45.5
2012
£m
60.0
20.2
[40.1]
40.1
• £100m total facilities with lenders
– 3 years to July 2016
– £60m Term
– £40m RCF
• Repayment of EM loan in year
• Covenants in full compliance
10MouchelAnnual Results 2013
Order Book and Pipeline – December 2013
• Order book £2.0bn – very healthy
• 85% cover for FY14 revenue
• 66% cover for FY15 revenue
• 43% cover for FY16 revenue
• Pipeline £2.1bn
• Leads and prospects in excess
of £5bn
11MouchelAnnual Results 2013
BUSINESS REVIEW
GRANT RUMBLES
CHIEF EXECUTIVE
Overview
• Key Strategic Actions – 2012/13
• Business Highlights
• Our Strategy
• Summary and Outlook
13MouchelAnnual Results 2013
Key Strategic Actions – 2012/13
1) Simplify organisational structure, increasing operational
focus at divisional level
2) Maintain and grow in markets where Mouchel is leading,
focus on our core strengths
3) Reduce overhead costs to deliver the right cost base
for Mouchel
4) Increase focus on our contracts to improve profitability
and win additional work
14MouchelAnnual Results 2013
• Sustainable
growth
• Improved
profitability
Key Strategic Actions – 2012/13
1) Simplify organisational structure, increasing operational focus at divisional level
15MouchelAnnual Results 2013
Key Strategic Actions – 2012/13
1) Simplify organisational structure, increasing operational
focus at divisional level
2) Maintain and grow in markets where Mouchel is leading,
focus on our core strengths
3) Reduce overhead costs to deliver the right cost base
for Mouchel
4) Increase focus on our contracts to improve profitability
and win additional work
16MouchelAnnual Results 2013
Achieved
• Won over £1bn
of new work
• Order book £1.7bn
• Pipeline £2.4bn
• Leads over £5.0bn
Key Strategic Actions – 2012/13
1) Simplify organisational structure, increasing operational
focus at divisional level
2) Maintain and grow in markets where Mouchel is leading,
focus on our core strengths
3) Reduce overhead costs to deliver the right cost base
for Mouchel
4) Increase focus on our contracts to improve profitability
and win additional work
17MouchelAnnual Results 2013
Achieved
• The budget was
to reduce cost
by £18m
• Achieved over
£21m reduction
Key Strategic Actions – 2012/13
1) Simplify organisational structure, increasing operational
focus at divisional level
2) Maintain and grow in markets where Mouchel is leading,
focus on our core strengths
3) Reduce overhead costs to deliver the right cost base
for Mouchel
4) Increase focus on our contracts to improve profitability
and win additional work
18MouchelAnnual Results 2013
Achieved
• Implemented
IS and MBS
transformation
plans
• All major MBS
contracts rebased
• Underlying
EBITDA £37m
• EBITDA margin
6.7%
Infrastructure Services
2013 highlights:
• Acquired additional 50 percent
of EnterpriseMouchel in February
2013. Business renamed EM
Highway Services Ltd
• Won largest-ever contract with
Highways Agency – Area 3 valued
at circa £700m
• Won London Highways Alliance
Contract (LOHAC) South with
Transport for London valued at
circa £400m
• Won Scottish trunk roads contract
South West Scotland valued at
circa £125m
19MouchelAnnual Results 2013
Since year-end:
• South East Queensland road
maintenance contract valued at
circa AUD$135m
• West Sydney roads maintenance
contract valued at circa AUD$700m
• Norfolk County Council PSSC
contract valued at circa £20m
• Water – bid preparation for AMP6
• Middle East – targeting increasing turnover
by 3 times over next three years
Mouchel Business Services
2013 highlights:
• Rebased all of our main local
authority contracts
• Implemented MBS transformation
plan. Reorganised division to matrix
model to drive best practices
in service delivery
• Three-year contract extension with
Oldham Council valued at circa £50m
• Won single supplier status on
three-year Police Pensions
Administration Service Framework
for Cheshire and Merseyside Police
worth circa £2.5m (option to extend)
20MouchelAnnual Results 2013
• Broke into higher education sector winning
a place on all, four lots of University
of Liverpool Property Framework
valued at circa £200m
• Won appointment to four-year
Government Procurement Service
Framework to deliver Estates
Professional Services valued
at circa £60m-£120m
Our Strategy
Clients
Continue to build great relationships by
delivering collaborative thought leadership
and excellent service
People
Retain and recruit “best in class” and assist
them to excel
Growth
Focus on core strengths
Enhance our capabilities
Maintain and grow in markets where Mouchel is leading
Expand our market coverage
Operations Deliver One Mouchel excellence to our
clients across the world
21MouchelAnnual Results 2013
Sustainable
growth and
profitability
Summary and Outlook
• 2013 successful year for Mouchel with
strong performance across all KPIs
• Infrastructure Services markets
are target-rich and growing
• Mouchel Business Services is well placed
to capitalise on any opportunities in challenging
local authority markets
• Expect further margin improvement
due to additional cost synergies and
economies of scale
• Strong platform for our ambitious growth plans
22MouchelAnnual Results 2013
Q&A