REG - MITIE Group PLC - H1 FY24 pre-close trading update

MITIEAnnouncement

11/10/2023 07:00

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RNS Number : 7002P  MITIE Group PLC  11 October 2023

 11 October 2023

 

Mitie Group plc: H1 FY24 pre-close trading update

 

Good trading momentum continuing

FY24 expectation for operating profit increased to at least £190m

Next £25m tranche of £50m share buyback programme launched

 

Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), the UK's leading
facilities management company, today provides a pre-close trading update for
the six months ended 30 September 2023 ("H1 FY24").

 

H1 FY24 Highlights

 •    H1 Group revenue 1  expected to be up by c.11% to £2.1bn (H1 FY23: £1.9bn)
 •    c.£2.2bn total contract value 2  ("TCV") of new contract wins and
      extensions/renewals
 •    £46m invested in five higher growth, higher margin strategic bolt-on
      acquisitions
 •    First £25m tranche of £50m share buyback programme completed (26m shares
      purchased); next £25m tranche launched today
 •    Average daily net debt increased to c.£160m (H1 FY23: £62m) and closing net
      debt to c.£115m (H1 FY23: £64m), reflecting higher M&A spend and ongoing
      shareholder returns

 

Outlook

 •    Agreement to amend Landmarc shareholders' agreement to fully consolidate
      Landmarc's revenue and profits (H2 operating profit benefit c.£5m)
 •    FY24 expectation for operating profit before other items raised to at least
      £190m, underpinned by good ongoing trading and delivery of margin enhancement
      initiatives

 

Revenue growth

H1 FY24 group revenue (including share of joint ventures and associates)
increased by c.11% to £2.1bn, compared with the same period last year (H1
FY23: £1.9bn).  This good performance was driven by an increase in projects
and variable work, pricing, and the contribution from recent acquisitions.

 

Contract wins and extensions/renewals

During the period we won or extended a number of significant new contracts
with up to c.£2.2bn TCV (H1 FY23: £1.5bn). Notable new wins included new
Amazon sites, the Defence Infrastructure Organisation in Germany, the Home
Office, and Phoenix Group. Notable extensions/renewals included the Foreign
Commonwealth and Development Office, Lloyds Banking Group, the Ministry of
Justice, Network Rail, and Sky.

 

Acquisitions

We have continued our strategy of adding high growth infill acquisitions to
grow our Projects business, focused on upselling to our existing customers.

 

During H1 we have added to our position as the leader in the intelligence and
technology-led fire and security market, acquiring Linx International (April)
-- a leading risk management and consulting business; RHI Industrials (May) -
a leading installer of high-tech security and access controls; and Biservicus
Group (September) - a Spanish security business.

 

Enhancing our Mechanical & Electrical engineering credentials, we acquired
JCA Engineering (September), a leading principal contractor for complex
engineering projects across the UK, with a particular focus on critical
environments including data centres, healthcare and life sciences. We also
purchased the assets of G2Energy (August), a leading high voltage and battery
energy storage contractor, via a liquidation process.

 

Acquisitions contributed c.1.7% of inorganic revenue growth to the Group in H1
FY24.

 

Net debt

We expect to end the six-month period with average daily net debt of c.£160m
(H1 FY23: £62m).  Closing net debt at 30 September 2023 was c.£115m, an
increase of c.£70m from 31 March 2023.  This increase since 31 March 2023
reflects our good free cashflow generation (c.£45m), offset by increased
lease costs (c.£10m), and capital allocations totalling £107m.  The capital
allocations relate to the five acquisitions completed in the period (£46m),
dividends paid (£29m), shares bought back (£25m), and share purchases for
future employee incentive schemes (£7m).

 

Second tranche of share buyback programme launched

We have launched today the second £25m tranche of our current £50m share
buyback programme.  In the first £25m tranche, 26m shares were purchased at
an average price of 96p, of which 5m shares were cancelled. The balance of 21m
shares were held in treasury to satisfy the 2020 SAYE scheme vesting in
December 2023 (30m shares required in total).

 

FY24 Operating profit guidance and outlook

Based on the encouraging performance in H1, we now expect operating profit
before other items for the year ended 31 March 2024 ("FY24") to be at least
£190m, inclusive of the contribution from the acquisitions completed in the
year to date.  Our guidance is underpinned by good ongoing trading and
positive momentum within the margin enhancement initiatives implemented in the
first half of the year.

 

From H2 FY24, it is expected that the Landmarc military training estate joint
venture will be consolidated as a subsidiary of Mitie, reflecting agreement
reached with Mitie's joint venture partner to amend the Landmarc shareholders'
agreement 3 .  This will enable Landmarc to benefit from the wider
capabilities of Mitie, and will result in full consolidation of Landmarc into
the Mitie accounts, adding an incremental c.£40m of revenue and c.£5m of
operating profit in H2 FY24 (included within our expectation for operating
profit of at least £190m, as above). EPS is not impacted.

 

Capital Markets Event

Mitie will host a Capital Markets Event at The Shard on Thursday, 12 October
2023 at 1.00pm BST.  The event will introduce the Group's new three-year plan
for FY25-FY27, and will feature a series of presentations and technology
demonstrations from the Mitie Senior Leadership Team.

 

For further details and to register please contact kate.heseltine@mitie.com
(mailto:kate.heseltine@mitie.com) .

 

Interim results release and presentation

Mitie's interim results for the six months ended 30 September 2023 will be
released on Thursday, 23 November 2023.  A presentation will be held for
analysts at 9.30am.

 

H1 FY24 financials disclosed in the above trading update (and in the interim
results announced on 23 November 2023) are unaudited.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014.

 

 

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For further information

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

 Group IR 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's job is to look after places where Britain works, and
it is the leading facilities management company in the UK. We offer a range of
services to the public sector through our Central Government & Defence and
Communities (Healthcare, Education, Campus & Critical and Care &
Custody) divisions. Our Technical Services (Engineering Services, Energy,
Water and Real Estate Services) and Business Services (Security, Cleaning,
Landscapes, Spain and Waste) divisions serve private sector customers in areas
such as Financial & Professional Services, Industrials, Retail and
Transport, and increasingly the public sector.

Mitie employs 64,000 people. We take care of our customers' people and
buildings, through the 'Science of Service', and we are transforming
facilities to be more flexible, safe, sustainable, and attractive to all.
Mitie continues to execute its technology-led strategy and in the past twelve
months has received multiple awards and validation for its ambitious near and
long-term science-based emissions reduction targets from the Science Based
Targets initiative (SBTi). Find out more at www.mitie.com
(http://www.mitie.com) .

 1  From continuing operations and including share of JV and associates

 2  Including estimates for projects and variable works

 3  The change of control in relation to Landmarc requires a mandatory
notification under the UK National Security and Investment Act 2021 due to
Landmarc's business of providing services for the management and operation of
the UK Defence Training Estate. The amendments to the shareholders' agreement
will not become effective until clearance has been granted, which is expected
to be received in early November 2023

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