Interviewee: Paul Woolf, Mitie CFO
Issue: Mitie's results and the market
06 August 2018 | Paul Woolf
CFO Paul Woolf discusses Mitie's results and the broader FM market.
Your results overall were encouraging. What do you think this tells you about the industry?
I joined Mitie six months ago and what has become clear to me is that each outsourcer is very different and each has its own challenges, but the industry as a whole is still very much in demand. Outsourcers provide vital services, with expertise and experience - offering customers value and allowing them to concentrate on their own businesses - what they do best. We need to ensure that we keep explaining how we add value to our clients each and every day.
What role did you play in the company's performance?
Initially, my focus was on making sure basic controls were in place. I looked at the key drivers impacting Mitie's performance and then applied rigorous spend controls to them. These included recruitment (we are an organisation of 50,000 people); out of cycle pay reviews; expenses; and project sign-offs. Joining a business in turnaround presents a really exciting opportunity. Ensuring our transformation programme, known as Helix, continues to drive cost savings is a core focus for me. So far, this programme has delivered run rate cost savings of £27 million and we expect this to rise to run-rate cost savings of £50m by March 2020. We have more to do here but our ambition remains to be the most efficient, value-focused technology-led company in our industry.
I've also been working hard to improve Mitie's balance sheet. We have reduced our reliance on invoice discounting by £34m to £76m and I plan to keep reducing this. We are also committed to continued improvements in our supply chain management and have reduced payables days from 72 days last year to 58 this year as a consequence of improving our supplier payment performance.
How has Carillion's fall changed the FM landscape, and will this stick?
It has put us centre stage as a sector, has sparked a debate on the pricing of risk, and it has challenged customers and suppliers to think about the value of their offering.
Will pricing power really shift in favour of outsourcers now (as your CEO has indicated)?
There needs to be a wholesale review in the pricing of risk. For too long there has been a race to the bottom in terms of cost and that's not sustainable. Contracts need to correctly account for price, quality, certainty and timeliness of delivery. We don't think that the shift will be in favour of outsourcers, more that suppliers and customers need to share in value creation.
What do you feel are Mitie's challenges and plans now?
We're a year into a three-year transformation plan Our focus will continue to be on excellent engagement with our customers.