Full-year results Twelve months ended 31 st December 2012 Adrian Ringrose, Chief Executive Tim Haywood, Group Finance Director Capital Markets Update 27 th February 2013 30 April 2013
Who you will be meeting Adrian Ringrose Tim Haywood Chief Executive Group Finance Director Ian Hayes Phil Clark Operations Director Business Development Director Lord Adonis George Franks Managing Director – Interserve International
T oday’s itinerary • 2010-2015 development . Adrian Ringrose • Sustain Abilities Tim Haywood • The healthcare market Phil Clark • UK outsourcing and infrastructure Lord Adonis • Support Services and Construction International George Franks • Equipment Services Ian Hayes • Lunch (approximately 1pm)
Outlook: 2010 versus 2012 2010 2012 2010 2012 Sustainable Sustainable Medium-term Medium-term medium-term medium-term growth rate growth rate margin trends margin trends Actual Outlook Actual Outlook Support Services 4% 4.0% c. 5% 4% 2.5% c. 5% UK Support Services - 12.8% c. 13% 4%-8% - - International Construction UK 0% 2.0% 1.5 - 2% -2% 3.0% c. 2% Construction 14% 6.5% c. 6% 11% 10.7% c. 7% International Equipment 10%-14% 11% 10.3% c.15% 9.6% c.15% Services
Support Services UK: Development since 2010 Strategic developments: Revenue/contract • Client/account growth development • Organic expansion into criminal justice rehabilitation • Inorganic expansion into welfare and health • Support function reengineering 2013-2015 outlook 2010 2011 2012 Revenue(£bn) 1.0 1.0 1.1 • Demand growth Contribution to operating 25.1 36.4 44.3 profit (£m) • Margin Progression Operating margin 2.4% 3.6% 4.0% Future workload (£bn) 3.9 4.2 5.2 • Further diversification
Support Services International: Development since 2010 Revenue/contract Strategic developments: development • O rganic diversification into FM in UAE, Qatar and Oman • Inorganic expansion of training business (OTI) • Organic diversification of oil and gas services • Inorganic geographic expansion in oil and gas (TOCO) 2013 – 2015 Outlook 2010 2011 2012 Revenue (£m) 23.7 25.9 31.3 • Organic and inorganic expansion in oil/gas Contribution to operating 3.4 3.6 3.7 profit (£m) Operating margin 14.8% 15.1% 12.8% • Growth in FM services Future Workload (£m) 17.0 63.1 51.0
Construction UK: Development since 2010 Strategic developments: Revenue/contract development • Continued focus on regional businesses and national frameworks • Cost base focus • Product and services development (BIM/Passivhaus/PodSolve) • Sector diversification (EfW/selective development) 2013-2015 Outlook 2010 2011 2012 Revenue(£bn) 0.8 0.7 0.7 • Stable in the near-term Contribution to operating 24.5 18.0 14.6 profit(£m) • Demand-led recovery from 2014 Operating margin 3.2% 2.5% 2.0% Future Workload (£bn) 0.9 0.9 0.9
Construction International: Development since 2010 Strategic developments: Revenue/contract development • Cost base focus • Strengthened leadership • Organic and inorganic expansion of interiors • Selective contract up-scaling via JV • Product development (Bionest) 2013-2015 Outlook 2010 2011 2012 Revenue (£bn) 0.2 0.2 0.2 • Near-term remains mixed but early signs of improvement Contribution to operating 22.8 16.6 14.3 profit (£m) Operating margin 10.3% 8.4% 6.5% • Stronger growth in the medium- term across the Middle East Future workload (£bn) 0.2 0.2 0.2
Equipment Services: Development since 2010 Strategic developments: • Global fleet management – Capex restraint and increased transfers • Flexible operating model • Back-office off-shoring to high skill/low cost geographies • Geographical expansion • Product Development Cruise ship terminal, Hong Kong 2013-2015 outlook 2010 2011 2012 Revenue (£m) 139.9 154.3 167.5 • Development through flexible global presence Contribution to operating 14.4 13.6 16.0 profit (£m) • Individual markets mixed but Operating margin 10.3% 8.8% 9.6% continued growth in the portfolio
Financial position • Strong cash conversion (117%, 3 year rolling average) • Disposed of the majority of our PFI portfolio for £179.5m realising significant latent value • Materially reduced actuarial pension deficit from £224m to £95m • Substantial available committed debt capacity (£246m)
Group-wide developments Developing the Interserve brand • Driving greater sustainability • Account management • Talent management • Learning and development • Health and Safety •
Summary We are delivering our aspiration by: • Client & account development • Good execution of contracts • Accessing further growth markets • Strong balance sheet Selective, accretive acquisitions (welfare, • oil/gas, healthcare at home services) • Dividend progression
Tim Haywood –
Sustainable performance commercial value Understanding and managing risk - technical, reputational Stewardship, resource scarcity , supply chain complexity , human capital management Improved reporting, better articulation of business strategy and impacts of material factors
Strategic approach, fully integrated into the business Key differentiator in the way we do business going forward Ambitious commitment, take a leadership position Launched 21 st March
What does mean? A clear vision: to redefine the future for people and places Do the right thing, manage risks, realise opportunities Measure our impact on society and the environment Embed positive behaviour, achieve culture change Collaborative approach, sharing ideas, making suggestions and breaking down of silos within the business
4 Capitals Measure our impact beyond traditional financial metrics: Natural resources, drinking water, breathable air, energy, raw materials Social connections, benefits, roles, networks, employment, trust, belonging, wellbeing, health Skills, knowhow, experience, apprenticeships, graduate training schemes, employees, education Financial management, growth, profit, reporting
5 Outcomes > 15 Goals > 48 Targets
Phil Clark – Healthcare market
AGENDA Introduction The Healthcare Market • Interserve Strategy • Non-Clinical Services – Leicester • Project Clinical Services – Advantage • Healthcare
The Healthcare Market
Market Growth in healthcare Legislation Regulation Compliance Enhanced Health & Social Monitor CQC Competition and Care Act 2012 Market Growth c.5-10% p.a • Any Qualified • Inspect and • CCG’s Provider regulate • CSG’s • NHS Provider • National Enhanced • Licences Standards Clinical Powers • NHS • Chief Foundation Inspectors Trusts
Market Segmentation- our areas of focus • Established growing FM Market in non-clinical services • Growing community market in clinical services Non Clinical Clinical £15bn Community £5bn FM Market £50bn £25bn £15bn Secondary Primary
Available Market to Interserve 2010 - 2015 2010 2013 2015 Non-Clinical £4.5bn £5bn £5.5bn Clinical £14bn £15bn £17bn
Market Share and Competitor Dynamics • Clinical Community market growing opportunity for outsourcing • Non-clinical market developing larger integrated packages Clinical Community Services Non-Clinical Services £2.3bn c.£1b outsourced long term outsourced c.£2bn short term outsourced £5bn £15bn In-house c.£2bn in-house
Interserve Strategy
Interserve Strategy Non Clinical Services £5bn Service Capability Relationship Synergies Health Market Understanding Infrastructure Community £20bn Services £15bn
Non-Clinical Services – Leicester Project
Leicester Pathfinder Project The Client Primary & Community Secondary Community MENTAL AND CCG ACUTE COMMUNITY Leicester Health Collaborative The Opportunity • • • Hard Services Estates Community Care • • Cleaning Management Strategy The Solution • • • Catering Acquisitions Logistics • • • Security Disposals Construction • • • Front of House Lease Consultation management FM Outsourcing Property Transformation
Our Commitment to Leicester 2013 2020 2013 2020 2013 2020 2013 2020 500,000m2 60% clinical care + 10% + 10% 380,500m2 Benchmark standards - 20% - 20% 36% for direct clinical care Estate Usage and Standards Costs Reduction Occupancy
Leicester – Value Proposition 20% of Total £1bn Budget 20% of Property £250m Man. Spend Interserve Saving Total Spend £130m Property Non Clinical Transformation
Key features to our approach Aligned Commercials Complement Clinical not Compete Understanding Partner Approach Track records Guaranteed of delivery Savings Integrated Local Service Company Capability
Leicester Growth Opportunities Other local NHS NHS Property Services Nottingham NHS Trust customers Regional Government Leicester City Council Leicester County Council customers Southampton New NHS Frameworks Leeds across the UK
Clinical Services -
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