REG - MITIE Group PLC - FY24 Full Year Trading Update

MITIEAnnouncement

15/04/2024 07:00

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RNS Number : 5237K  MITIE Group PLC  15 April 2024

15 April 2024

Mitie Group plc

LEI number: 213800MTCLTKEHWZMJ03

 

FY24 Full Year Trading Update

 

Record revenue of at least £4,500m (11% increase yoy)

Operating profit increased to at least £200m (4.5% margin)

Share buybacks continue with next £50m programme launched

 

Mitie Group plc ("Mitie" / "the Group") (LSE: MTO), the UK's leading
facilities transformation company, today provides a trading update for the
year ended 31 March 2024 ("FY24").

 

Highlights

 ·         Mitie's strong track record of delivery continues: all medium-term targets met
           or significantly exceeded in FY24, the final year of our Three-Year Plan
 ·         Record revenue(( 1  (#_ftn1) )) of at least £4,500m: an increase of c.11% yoy
           (FY23: £4,055m); Q4 revenue growth of c.10% against a strong prior year
           comparative
 ·         Operating profit 2  (#_ftn2) increased to at least £200m, up c.23% yoy (FY23:
           £162m)
 ·         Operating margin2 (#_ftn3) of c.4.5% achieved in FY24: strong H2 operating
           margin of c.5%
 ·         Basic EPS2 (#_ftn4) expected to grow broadly in line with operating profit,
           with lower net finance costs and share capital reductions offset by a higher
           corporation tax rate
 ·         Closing net debt of c.£85m (31 March 2023: £44m), reflecting strong free
           cash flow offset by increased shareholder returns, M&A and an increase in
           lease obligations
 ·         Further £50m share buyback programme commences today

 

Commenting on the outlook, Phil Bentley, CEO, said:

"We are pleased with the performance of the business in FY24, having delivered
record revenue and operating profit, and an operating margin of 4.5%. Free
cash flow generation has been strong, supporting our ongoing commitment to the
return of surplus funds to shareholders via share buybacks.

 

"Our focus on technology, innovation and our people underpins our industry
leadership in the UK, which is the largest and most dynamic FM market in
Europe. Our strategy for Facilities Transformation will see Mitie extend its
market leading position by converting our record pipeline of opportunities
into new Key Accounts; accelerating growth in projects as we work with our
customers to transform their estates; and continuing delivery of cost saving
initiatives."

 

Trading update

Q4 FY24 revenue of c.£1,240m increased by c.10% yoy (Q4 FY23: £1,127m),
against a strong prior year comparative for projects work. Revenue has
exceeded £1bn in each quarter of FY24, and has grown sequentially
quarter-on-quarter.

 

As a result of the strong trading performance in the final quarter, we expect
FY24 revenue to grow by c.11% to at least £4,500m (FY23: £4,055m). This
increase reflects organic growth of c.7% from Key Accounts and Projects
upsell, with c.4% of inorganic growth. The largest contributors to the
inorganic growth were JCA Engineering, GBE Converge and RHI Industrials.

 

We have continued to see sustained demand from our clients for
transformational projects across their estates, driven by macro trends
including decarbonisation, the modernisation of the built environment, and
changes in the regulatory landscape. FY24 Projects revenue will exceed £1bn
(FY23: £0.8bn).

 

As a result of the uplift in Group revenue, combined with our extensive
programme of margin enhancement initiatives and ongoing management of cost
inflation, we now expect operating profit before other items to be at least
£200m. This represents an increase of at least 23% on the prior year (FY23:
£162m).

 

With this outturn we will have achieved the final target from our Three-Year
Plan, reaching an operating margin of c.4.5% in FY24. Our H2 performance
exceeded that of H1, both for revenue (H1 FY24: £2,132m) and operating profit
(H1 FY24: £85m), resulting in an operating margin of c.5% in the second half
of the year.

 

During the final quarter, we secured a number of notable wins and scope
increases including with Eastern Police Forces for custody services, FDIS for
decarbonisation projects work, London Southbank University and WPP for IFM,
and Sainsburys and Lloyds Banking Group for additional security. Notable
renewals included with Associated British Ports, AWE, the Department for
Transport, GSK, HMRC, the Home Office, JLL and Qinetiq. We are entering the
new financial year with a healthy order book and £19bn pipeline.

 

Infill M&A

We completed seven strategic acquisitions for a combined consideration of
£65m in FY24. Our position as a leader in the intelligence and technology-led
Fire & Security market has been enhanced by four acquisitions, including
RHI Industrials (a leading installer of high-tech security and access
controls), and GBE Converge (a leading provider of fire, security and ICT
solutions). We also enhanced our Mechanical & Electrical (M&E)
engineering capabilities through the acquisition of JCA Engineering, which is
a leading principal contractor for complex engineering projects, with a
particular focus on Data Centres and other critical environments.

 

Net debt

Closing net debt (post-IFRS 16) at 31 March 2024 was c.£85m (31 March 2023:
£44m). The increase in net debt since 31 March 2023 reflects strong free cash
flow generation, offset by planned capital deployment actions and an increase
in lease obligations.

 

Total capital deployments of £149m included the share buyback programme
(£50m) 3  (#_ftn5) , share purchases for employee incentive schemes (£20m),
strategic acquisitions (£65m) and dividend distributions (£44m), partially
offset by Landmarc cash acquired on consolidation (£30m). There has also been
an increase of c.£45m in lease obligations as we transition our fleet to the
more expensive electric vehicles and extend the duration of the leases.

 

FY24 average daily net debt is expected to be c.£160m (FY23: £84m).

 

Capital allocation and share buybacks

Our capital allocation policy prioritises a progressive dividend; the purchase
of all shares to fulfil employee incentive schemes; strategic bolt on
acquisitions; and the return of surplus funds to shareholders, whilst ensuring
that we remain within our target leverage range of 0.75x to 1.5x (average net
debt / EBITDA).

 

Consistent with our policy, we are continuing to buy back shares through a
further £50m programme which commences today. Within the programme, c.10m of
the shares purchased will be held in treasury to satisfy the 2021 Save as You
Earn (SAYE) scheme, vesting in January 2025. All remaining shares purchased as
part of the buyback programme will be cancelled.

 

Over the past two years, 127m shares have been purchased for £100m via share
buyback programmes (of which 95m have been cancelled), at an average price of
79p. A further 71m shares have been purchased for £58m into our Employee
Benefit Trust (at an average price of 82p).

 

Full year results release and presentation

Mitie's full year results for the year ended 31 March 2024 will be released on
Thursday 6 June 2024 and a presentation will be held for analysts at 9.30am.

 

- END -

 Full Year Summary                    FY24               FY23

                                      Expected           Actual
 Revenue                              At least £4,500m   £4,055m

 Operating profit before other items  At least £200m     £162m
 Average daily net debt               c.£160m            £84m

 Closing net debt                     c.£85m             £44m

 

FY24 financials disclosed in the above trading update are unaudited.

 

For further information

 Kate Heseltine                              M: +44 (0)738 443 9112  E: kate.heseltine@mitie.com (mailto:kate.heseltine@mitie.com)

 Group IR & Corporate Finance Director

 Claire Lovegrove                            M: +44 (0)790 027 6400  E: claire.lovegrove@mitie.com (mailto:claire.lovegrove@mitie.com)

 Director of Corporate Affairs

 Richard Mountain                            M: +44 (0)790 968 4466

 FTI Consulting

 

 

 

About Mitie

Founded in 1987, Mitie employs 65,000 colleagues and is the leading
technology-led Facilities Transformation company in the UK. We are a trusted
partner to c.3,000 blue chip customers across the public and private sectors,
working with them to transform their built estates, and the lived experience
for their colleagues and customers, as well as providing data-driven insights
to inform decision making.

In each of our core services of Engineering (Hard Services) and Security and
Cleaning & Hygiene (Soft Services) we hold market leading positions. We
also upsell Projects capabilities in the areas of building fitouts and
modernisation, decarbonisation, fire & security, and telecoms
infrastructure. Our sector expertise includes Central Government, Critical
National Infrastructure, Defence, Financial Services, Healthcare & Life
Sciences, Local Government & Education, Retail & Logistics and
Transport & Aviation.

We hold industry leading ESG credentials, including a CDP 'A' score, and in
the past 12 months we have received multiple industry awards including B2B
Marketing Team of the Year, Best Low Carbon Solution and Net Zero Carbon
Strategy of the Year. Targeting Net Zero by the end of 2025, our ambitious
emissions reduction plans have also been validated by the Science Based
Targets initiative (SBTi). We have been recognised as a UK Top Employer for
the sixth consecutive year. Find out more at www.mitie.com
(http://www.mitie.com) .

 

 1  (#_ftnref1) Including share of JVs and associates

 2  (#_ftnref2) Before other items

(#_ftnref3)

(#_ftnref4)

 3  (#_ftnref5) Net of £8m cash receipts from the exercise of 2020 SAYE
scheme shares that vested in December 2023

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