Leadership Business Update - Interserve · • Differentiated offering with improved processes ... • Positioning ourselves for market recovery ... • Workshoppp p g ys part of

Leadership Business Update

Adrian Ringrose, Chief ExecutiveAdrian Ringrose, Chief ExecutiveTim Haywood, Group Finance Director

3 April 20143 April 2014

Agenda

• 2013 Results Overview2013 Results Overview

• Divisional highlights

• Acquisition update

• Interserve in action

• 2014 key Issues/outlook

• 2014 so far

• Questions• Questions

Redefining the future | 2

Health and safety performance• 2013: a year of lows and highs

• We have brought forward our target to halve our Accident

y p

We have brought forward our target to halve our Accident

Incident Rate (AIR) to 2019 from 2020

• Early indications for 2014 show we are on track to achieve this

• AIR down 16% to 201 per 100,000 employees in 2013


2013 overview

Broadening our capabilities• Acquisition of Initial FacilitiesAcquisition of Initial Facilities• Building oil and gas services capability with TOCO and Adyard• Increased UK capability with Paragon• Haymarket property development

Strong performance• Growth in revenue and profit• Growth in EPS and dividend• Strong share price performance

Strong Balance Sheet• Reduced pension deficit• Increased capital investment


Income statement

£ million 2013 2012

Revenue 2,192.6 1,958.4 +12%

Total operating profit 86.7 78.4 +11%p g p

Interest (5.6) (3.1)

Headline profit 81.1 75.3 +8%

Amortisation of intangible assets (8.9) (6.5)

Exceptional items (4.1) 111.0

P fit b f t ti 68 1 179 8Profit before taxation 68.1 179.8

Taxation (13.1) (10.5)

Profit after taxation 55.0 169.3Profit after taxation 55.0 169.3

Headline EPS 47.7 45.3 +5%

Dividend per share 21.5p 20.5p +5%


Acquisitions and disposals

Cash Headline PensionCash Headline

EPS

Pension

funding

Disposals £119m 2.7p £55mp

Acquisitions No change£94m 4.0p

Net movement £25m £55m1 3pmovement £25m £55m1.3p


Construction UK

2013 2012 Growth£m £m

Revenue 802.2 737.2 8.8%Operating profit 17.6 15.5 13.5%Operating margin 2.2% 2.1% 0.1%

• Good performance in tight markets

• Growth in volumesGrowth in volumes

• Margins improved

• Increased capabilities & geographical reach i Pvia Paragon.

• Differentiated offering with improved processes (BIM) and sustainability

• Strong repeat business and diversificationThe Sutton Academy, St Helens


International2013 2012 Growth£m £m

Revenue 316.4 232.9 35.9%Operating profit 15.0 17.1 -12.3%Operating margin 4.7% 7.3% -2.6%

• Acquisitions of TOCO & Adyard mark a step change in the International Support Services business.pp

• 2013 saw difficult markets in Qatar and Oman with short term demand weakness and pricing pressure

Khansaheb - FM

p g p

• Beginning to see signs of growth in the region with a positive outlook for 20142014

• Working to improve health and safety across the region after six people tragically lost their lives in 2013tragically lost their lives in 2013

* Incl share of associates resultsRedefining the future | 8

Equipment Services

2013 2012 G th2013 2012 Growth£m £m

Revenue 169.6 167.5 1.3%Operating profit 20.8 16.1 29.2%

Salalhal International Airport passenger terminal, Oman

Operating margin 12.3% 9.6% 2.7%

• Very strong profit growth (operational gearing and increased hire revenues)

• Exploiting our engineering expertise & customer service in existing growth markets

• Chile, South Africa, Saudi Arabia, Hong Kong

• Positioning ourselves for market recovery• Well-placed to service early cycle US growth and extended operation on West

Coast

• Capital investment to support further growthRedefining the future for people and places | 9

DevelopmentsDevelopments2013 2012£m £m

Welfare to work 7.1 1.5PFI profits & overheads 0.0 6.6Sub debt interest 0.6 5.4

Majority of the PFI portfolio disposed of in 2012 & Jan 2013.

Total 7.7 13.5

• Transferred £55m of PFI assets into Group pension scheme, reducing the deficit and

Haymarket, Edinburgh

p p , gdelivering a profit of £3.6m

• Financial close and initial investment on the £200m Haymarket property development in Edinburghin Edinburgh.

• Achieved financial close on award-winning Alder Hey Children’s NHS Trust project

• Advantage Healthcare transfers to Developments from Jan 2014.g p

• Selected to redevelop former Co-op department store in Newcastle


Support Services UKpp

2013 2012 Growth2013 2012 Growth£m £m

Revenue 1,174.7 1,108.1 6.0%Operating profit 50.5 42.9 17.7%Operating margin 4 3% 3 9% 0 4%

• Strong revenue and profit growth

Operating margin 4.3% 3.9% 0.4%

• Strong work winning (BBC, Dixons, FCO)

• Successful integration of Advantage

Patient Hotel, London

Healthcare (moving to Developments in 2014)

• Acquisition of Initial Facilities is a transformational step both for the transformational step, both for the division and the Group as a whole


A i i i fAcquisition ofInitial - updatep

Acquisition updateq p

• Announced 28th February, completed

17th March

• Top structure agreed – analysis and

planning continue

• Rebrand to complete in six months

P i i l i d b l • Positively received by employees

• Well received by investors and press

• Share price rose 6% on the day of

announcementannouncement


Together we’re better.Together we re better.Our facilities business is now.....

• Strong fit of services, culture and expertise• Scale economies and process improvements


Complementary capabilities Complementary capabilities

CombinedCombined

Catering

Security

O F F E R I N G Cleaning

Reception

Grounds Maintenance

M h i l & El t i l

S E R V I C

E O Mechanical & Electrical

On site

Mobile

Waste management Waste management

Energy management

TFM

O N T R A C T

S I Z E S > £10m p.a.

£2m ‐ £10m p.a.

C O < £2m p.a.


Initial Facilities integrationg

• Integration steering group createdg g g p

• Worksteams in our core functions set up with

equal representation from Interserve and equal representation from Interserve and

legacy Initial Facilities to analyse:

- how we operate better together

- things that stay the same

- things we can improve

- changes we need to make and implications


New customersNew custo e s

• Expanded client baseExpanded client base

• Better balanced revenue mix

• New business sectors

• New large contracts in • New large contracts in

transport, retail and banking

sector, among many otherssector, among many others


I i iInterserve in action

Welfare

• To date IWF and RJF have helped over 43,000 people to find work

• Helped more than 2,000 new business t t th h t histart-ups through entrepreneur coaching

• Combined, IWF and RJF placed 50% more customers into work in current contract year than in prior yearyear than in prior year

• Helped 2,569 18-24 year olds into sustained employment in the last year Placed over 200 people within Interserve• Placed over 200 people within Interserve

• IWF and RJF to work more closely in 2014 to support recruitment within InterserveIWF l h d Ad t H lth il t• IWF launched Advantage Healthcare pilot to train customers in healthcare skills


Herts, Luton and Reading Schools, g• Interserve/Kajima joint venture chosen by EFA to build first batch of priority schools

• 7 schools to be built in Hertfordshire Luton and Reading• 7 schools to be built in Hertfordshire, Luton and Reading

• Construction value £127 million

• Construction to start after Oct 2014

• All schools to be delivered by August 2016

• Interserve to provide hard FM and lifecycle maintenance for schools for 25‐year period


West Kowloon Rail Terminus

• Terminus will be Hong Kong’s high speed il h b h dli 99 000 /drail hub, handling 99,000 passengers/day

• Most of terminus is underground but features 200m x 75m external roof S li d 45 000 2 f ffit t• Supplied over 45,000m2 of soffit support for complex roof design

• Provided travelling forms to construct 3km of overhead concrete ductingof overhead concrete ducting

• Also provide time saving and health and safety guidance to contractor


C U dCorporate Update

Relative PerformanceRelative Performance


Finance updateFinance update

• Initial Facilities acquisition enabled us to refresh re-price and Initial Facilities acquisition enabled us to refresh, re price and

extend our bank facilities

l b l d d ff • Put in place better mix, longer duration and more cost effective

financing from diverse sources

• Secured £200m bridging loan for extra short-term capacity

• Bridging loan to be replaced by US private placement – a longer-Bridging loan to be replaced by US private placement a longer

dated loan from US investors with a stable cost

A i iti tl f d d b f l l i f 12 9 h • Acquisition partly funded by successful placing of 12.9m shares,

raising £74.8m from new and existing investors


Integrated reportingg p g• ‘New look’ Annual Report published, with sustainability

at its heartat its heart

• Commitment to report performance in broader way,

focussing on impact our business has on four capitals:

- Financial

- Knowledge

- Social

- Environmental

• Grant Thornton to be appointed auditor, subject to

shareholder approval replacing Deloitteshareholder approval, replacing Deloitte


Progress Update• Baseline SustainAbilities data captured and

undergoing review & analysis Good environmental data e g fuel energy water

g p

Good environmental data e.g. fuel, energy, water! Lacking robust social metrics e.g. volunteer days

• Moving forward on 2014 targets & milestones • Sustainable procurement leading practice on

local sourcing, use of SMEs • Early Year Careers press coverage of National

A ti hi W k i i ti hiApprenticeship Week, increase in apprenticeships

• International engaged with SustainAbilities

• Building our reputation as a sustainability leader• Building our reputation as a sustainability leader, focus on Social Value as a key theme

• Launched our ‘first step’ towards an Integrated Annual Report

• E-learning module being rolled out, SustainAbilities Awards in Reward & Recognition, blogs on the Hub & a ds e a d & ecog t o , b ogs o t e ub &more to follow...


PeoplePeople

Innovation Co creation workshops• Innovation Co-creation workshops launched as part of Ingenuity at Work programme

• Support services apprentice Abi Pullin• Support services apprentice Abi Pullin featured in national newspapers

• Pipe fitter Louis Atherton named ECITB North West Apprentice of the YearNorth West Apprentice of the Year

• Launched recognition scheme to engage staff across all levels of the company

• Recognition scheme will culminate inRecognition scheme will culminate in awards ceremony to recognise those who ‘go the extra mile’ and deliver our values

• Roll-out of Early Career programme will y p gdevelop talent pipeline to meet business needs of today and push future growth


Communications Updatep

• Launch of new website

• Increased media/political profile

i i i /i i• Acquisition/integration comms

• New integrated annual report


Innovation

• Steve Dannan appointed Group innovation leadpp p

• Launched a series of engagement workshops to

enhance culture of innovation within the business

• 200 staff invited to offer feedback on how to:

• Foster more creative, inventive thinking

• Nurture ideas from conception to delivery

• Workshops part of drive to start planning today to p p p g y

overcome the challenges of tomorrow

• Feeds into our desire to lead the way in providing

ingenious solutions and services to our customers


Interserve Employee Foundation - update

• Recent IEF ball in Leicester raised £49,271

• Leah Shafik wins Ambassador Spirit Award p

• New IEF directors Sarah Archer, Lianne

h d k dLawson, Heather Key and Mark Judge

appointed

• IEF help sees early learning centre for deprived

children in Chennai India open in Januarychildren in Chennai, India, open in January

• Construction employees gave a day of their


time in December to help local charities

2014 Key Issues

Support Services

• Integrate and re-brand Initial Facilities

Equipment Services

• Demand-led investment in fleet,

• Continue to grow core business people and infrastructure

• Targeted geographic expansion and

growth in existing marketsConstruction

• Take advantage of market

improvements emerging in UK

g g

Developments

• Build equity portfolioimprovements emerging in UK

• Diversify service offering including fit-

out and project finance

• Expand project development capability

• Front-line services

International

• Develop integrated Engineering business

Group Centre

• Next stage capital structurep g g g

• Growth in Support Services

• Positioned for growth in improving

t ti k t

g p• Functional leadership in people,

technology, comms & innovation• Second year of SustainAbilities

construction markets


2014 so far….Developments

• Named preferred bidder to build new £33m p

blood centre near Edinburgh

• To redevelop iconic Co-op store in central

Newcastle to create leisure/hotel complex

• Won IJ ‘Deal of the Year’ for Alder Hey

Children’s Health Park project in LiverpoolChildren s Health Park project in Liverpool

RMD Kwikform

• Strong start to the year – significant

demand for capital expenditure

R b t t di f i fi t t• Robust trading performance in first two

months of the year

• Sydney divisional conference – focus onSydney divisional conference focus on

innovation and business developmentRedefining the future | 32

2014 so far….International

• Appointed to start work on phase two ofAppointed to start work on phase two of

£1bn Doha Festival City development

• GCC hired to undertake studio extension

project for Al Jazeera News Network

• Sheikh Mohammed and actor Will Smith

i it Kh h b’ ‘Th B h’ j tvisit Khansaheb’s ‘The Beach’ project

• Madina re-secured maintenance contract

with Shell in Qatar

• TOCO re-hired by Occidental Petroleum

in Oman to manage logistics operationsin Oman to manage logistics operations

• HUS awarded 5 year FM contract at

ExxonMobil head office in Qatar


2014 so far….Construction UK

• Chosen to build seven schools under theChosen to build seven schools under the

UK government’s PF2 scheme

• Awarded design and build contract for new

£38m CPI science centre in Darlington

• Won contract to design and build a Proton

B Th f ilit i M h tBeam Therapy facility in Manchester

Support Services

• First Security awarded manned guarding

and security services contract with the BBC

• Secured three-year contract with Foreign &Secured three year contract with Foreign &

Commonwealth Office in France

• In early stages of integration process


following Initial Facilities acquisition

SummarySummary

• 2013 was a very positive year for the Group:• 2013 was a very positive year for the Group:• 11% growth in Group Operating profit• Strong profit growth in Equipment Services & Support Servicesg p g q p pp• Stable margins and volumes in UK construction• Stabilising in Middle East construction• Strategic development through acquisition of Toco and Adyard• Strong balance sheet with reduced pension deficit

• More to come in 2014• Confidence ambition opportunity• Confidence, ambition, opportunity

• Improving markets

• Integration benefits


Q&AQ&A

text: +44 7537 404684

email: [email protected]


Leadership Business Update - Interserve · • Differentiated offering with improved processes ... • Positioning ourselves for market recovery ... • Workshoppp p g ys part of

Documents