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125 YEARS OF FORWARD THINKING

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. Introduction.

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125 YEARS OF FORWARD THINKING

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  1. 125YEARS OFFORWARDTHINKING Mouchel Annual Results 2013 Grant Rumbles, Chief Executive Paul Rayner, Finance Director

  2. GRANT RUMBLESCHIEF EXECUTIVE

  3. Agenda • Introduction • Financial Review • Business Review • Our Strategy • Summary and Outlook

  4. 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

  5. FINANCIAL REVIEWPAUL RAYNERGROUP FINANCE DIRECTOR

  6. Results • Results ahead of budget expectations • EBIT margin of 5.1% • EBITDA margin of 6.7% • Interest cover of 5 times on EBITDA • Strong cash from operations • £12m on EM acquisition • Net debt/EBITDA 1.2 times All measures are underlying

  7. Divisional Performance • 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

  8. Cash Flow • 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 favourablyto peer group • Modest capex requirements ongoing

  9. Other Cash Flows • 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

  10. Analysis of Borrowings • £100m total facilities with lenders • 3 years to July 2016 • £60m Term • £40m RCF • Repayment of EM loan in year • Covenants in full compliance

  11. 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

  12. BUSINESS REVIEWGRANT RUMBLESCHIEF EXECUTIVE

  13. Overview • Key Strategic Actions – 2012/13 • Business Highlights • Our Strategy • Summary and Outlook

  14. Key Strategic Actions – 2012/13 1) Simplify organisational structure, increasing operational focus at divisional level • Sustainable growth • Improvedprofitability 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

  15. Key Strategic Actions – 2012/13 1) Simplify organisational structure, increasing operational focus at divisional level

  16. Key Strategic Actions – 2012/13 1) Simplify organisational structure, increasing operational focus at divisional level • Achieved • Won over £1bn of new work • Order book £1.7bn • Pipeline £2.4bn • Leads over £5.0bn 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

  17. Key Strategic Actions – 2012/13 1) Simplify organisational structure, increasing operational focus at divisional level • Achieved • The budget was to reduce cost by £18m • Achieved over £21m reduction 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

  18. Key Strategic Actions – 2012/13 1) Simplify organisational structure, increasing operational focus at divisional level • Achieved • Implemented IS and MBS transformation plans • All major MBS contracts rebased • Underlying EBITDA £37m • EBITDA margin 6.7% 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

  19. Infrastructure Services 2013 highlights: • Acquired additional 50 percent of EnterpriseMouchel in February2013. 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 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

  20. 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) • 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

  21. Our Strategy Clients Continue to build great relationships by delivering collaborative thought leadership and excellent service Sustainable growth and profitability People Retain and recruit “best in class” and assist them to excel Growth Focus on core strengthsEnhance our capabilitiesMaintain and grow in markets where Mouchel is leadingExpand our market coverage Operations Deliver One Mouchel excellence to our clients across the world

  22. 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

  23. Q&A

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