125 YEARS OF FORWARD THINKING Mouchel Annual Results 2013 Grant Rumbles, Chief Executive Paul Rayner, Finance Director.

125YEARS OFFORWARDTHINKINGMouchel Annual Results 2013

Grant Rumbles, Chief ExecutivePaul Rayner, Finance Director

GRANT RUMBLESCHIEF 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


FINANCIAL REVIEWPAUL RAYNERGROUP FINANCE DIRECTOR

Results

2013£m

2012£m

Revenue 555.3 49.9Operating Profit 28.1 1.1EBITDA 37.0 1.8Interest [7.3] [0.4]Profit Before Tax 20.8 0.7Cash In/(Out) Flow From Operations

39.3 [6.3]

Net Debt 45.5 40.1

All measures are underlying

• 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


Divisional Performance

2013£m

2012£m

RevenueInfrastructure Services 387.9 31.3Mouchel Business Services 167.4 18.6Total 555.3 49.9

EBITInfrastructure Services 28.3 1.8Mouchel Business Services 5.3 1.2Unallocated Corporate Cost [5.5] [1.9]EBIT 28.1 1.1EBITDA 37.0 1.8

EBIT Margin % 5.1% 2.2%EBITDA Margin % 6.7% 3.6%

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

2013£m

2012£m

Operating Profit 28.1 1.1Depreciation 8.9 0.7Working Capital In/(Out) Flow 2.3 [8.1]Underlying Operating Cash 39.3 [6.3]Capex [3.8] –Net Cash From Operations 35.5 [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 favourablyto peer group

• Modest capex requirements ongoing


Other Cash Flows

2013£m

2012£m

Deficit Pension Contributions 4.3 0.6Other Pension Costs 5.1 –Restructuring Costs 10.7 1.0Acquisition of EM (incl. costs) 12.9 –

• 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


Analysis of Borrowings

2013£m

2012£m

Gross Debt 60.0 60.0RCF 21.2 20.2Cash [35.7] [40.1]Net Debt 45.5 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


Order Book and Pipeline – December 2013

• Order book £2.0bn – very healthy

• 85% cover for FY14 revenue



• Pipeline £2.1bn

• Leads and prospects in excess of £5bn


BUSINESS REVIEWGRANT RUMBLESCHIEF EXECUTIVE

Overview

• Key Strategic Actions – 2012/13

• Business Highlights

• Our Strategy

• Summary and Outlook


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

• Sustainable growth

• Improvedprofitability






Achieved• Won over £1bn

of new work• Order book £1.7bn• Pipeline £2.4bn• Leads over £5.0bn







Achieved• The budget was

to reduce cost by £18m

• Achieved over £21m reduction







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 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


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


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


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


Q&A

125 YEARS OF FORWARD THINKING Mouchel Annual Results 2013 Grant Rumbles, Chief Executive Paul Rayner, Finance Director.

Documents

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