REG - MITIE Group PLC - H1 FY25 Trading Update

MITIEAnnouncement

15/10/2024 07:00

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RNS Number : 1412I  MITIE Group PLC  15 October 2024

15 October 2024

Mitie Group plc

LEI number: 213800MTCLTKEHWZMJ03

 

H1 FY25 Trading Update

 

Good trading momentum continues; H1 revenue up c.13%

Record contract wins and renewals

 

Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), the UK's leading
Facilities Transformation company, today provides a trading update for the six
months ended 30 September 2024 ("H1 FY25").

 

H1 FY25 Highlights

 •    Revenue 1  (#_ftn1) expected to increase by c.13% to c.£2.4bn (H1 FY24:
      £2.1bn), including c.7% organic growth driven by new contract wins and scope
      increases, pricing and projects
 •    Q2 year on year revenue growth (c.16%) expected to exceed Q1 (10.5%), as a
      result of good Q1 wins and the provision of 'surge response' security services
 •    Record contract wins and extensions/renewals, up c.45% to c.£3.5bn TCV 2 
      (#_ftn2) (H1 FY24: £2.4bn), despite not renewing two public sector contracts
      ending in FY26
 •    Acquisition of ESM Power for £5.5m, enhancing our presence in the growing
      high voltage power connections market; Spanish security business acquired for
      €9m post-period end
 •    FY25 share buyback programme doubled to £100m in July; £54m (45m shares)
      purchased in the period at 120p average price (of which 34m shares have been
      cancelled)
 •    Closing net debt of c.£195m (31 March 2024: £81m), reflecting shareholder
      returns, investments and increased lease obligations, offset by good free
      cashflow generation
 •    Average H1 FY25 net debt c.£220m (H1 FY24: £156m)

 

Commenting on the H1 results and outlook for FY25, Phil Bentley, CEO, said:

 

"This is the foundation year of our new Three-Year Plan (FY25 - FY27), and we
are making investments in the business to develop our Facilities
Transformation offering and to drive growth throughout the Plan period.  We
are investing in technology to strengthen our market leading position; in
sales and marketing to drive greater wins and renewals; and in our Projects
capabilities to enhance our upsell opportunities.

 

"These investments are already starting to deliver tangible results, including
a record performance in new contract wins and contract extensions/renewals in
the period, ensuring continued growth momentum.

 

"Overall, we have made good progress against our strategic objectives, with
revenue growth of c.13% in H1; at least £20m of full year cost savings
identified from margin enhancement initiatives; and the completion of two
acquisitions. We therefore remain confident in meeting expectations for the
current year and delivering our Three-Year Plan targets."

 

 

 

Revenue growth

Mitie delivered a strong performance in H1 FY25, with revenue increasing by
c.13% to c.£2.4bn (H1 FY24: £2.1bn), of which c.7% was organic and c.6%
inorganic (the latter mainly from the Landmarc consolidation and the JCA and
GBE Converge acquisitions in FY24).

 

Organic growth was driven by new contract wins and scope increases, pricing
and projects. This includes higher volumes for the Immigration Escorting
Services contract in Care & Custody, as well as the provision of 'surge
response' security services for the Home Office during the summer. This
emergency provision of services more than offsets the one-off benefit in H1
FY24 from the provision of temporary services in respect of Afghan Relocations
and Border Forces.

 

Projects growth continues to be driven by the macro trends of decarbonisation,
grid connections, the modernisation of the built environment, data centre
expansion and regulatory changes, although our telecoms business continues to
face structural challenges. Notable projects undertaken during the period
included the fit out of fire safety systems within a new data centre in
Slough, solar PV installations for David Lloyd Sports Centres and NATS, a
waste composter installation for Sky and a major laboratory refurbishment for
Defra.

 

Contract wins and extensions/renewals

During the period, we won or extended a number of significant new contracts
with a record TCV of up to c.£3.5bn (H1 FY24: £2.4bn). Notable new wins
included security and cleaning services for Community Health Partnerships and
Landsec, building maintenance for The Coventry and Rugby Hospital, IFM and
projects for EY, engineering services for the Metropolitan Police Authority,
and the £400m Millsike Prison contract awarded by the Ministry of Justice.

 

We secured a further three-year extension with Lloyds Banking Group, our
largest private sector customer, with other extensions/renewals including
engineering and cleaning for Amazon, cleaning for Bank of Ireland, security
for Fedex and IFM for a major airport. Two public sector contracts were not
renewed during the period, and will end during FY26.

 

Acquisitions

We continue to pursue infill M&A to deepen our capabilities in the areas
of buildings infrastructure, decarbonisation, grid connections and fire &
security.

 

During the period, we completed the acquisition of ESM Power, a leading high
voltage electrical engineering business, for £5.5m initial cash
consideration. This acquisition enhances our expertise in the growing high
voltage power connections market. Shortly after the period end, we acquired
Grupo Visegurity, a leading security business in Spain, for €9m (£7.5m)
initial cash consideration. This, alongside the recent acquisition of
Biservicus, supports the strategic expansion of our security service
capabilities in the highly fragmented Spanish FM market.

 

Net debt

Closing net debt (post-IFRS 16) at 30 September 2024 was c.£195m, an increase
of c.£115m from 31 March 2024. This increase since the year end reflects
capital returns to shareholders and investments (£122m), and increased
vehicle lease obligations (c.£20m), offset by good free cash flow generation
(c.£30m). Capital returns to shareholders and investments included dividends
(£45m), share buybacks (£54m), share purchases for incentive schemes (£9m),
acquisitions (£5.5m) and payments for acquisition related earnouts/completion
accounts (£8m).  H1 FY25 average daily net debt was c.£220m (H1 FY24:
£156m).

 

Share buyback programme

On 24 July 2024, we announced the doubling of our Share Buyback Programme,
from £50m to £100m. During H1 we purchased 45m shares at an average price of
120p per share, of which 34m shares were cancelled. The balance of 11m shares
are being held in treasury to satisfy Mitie's 2021 Save As You Earn (SAYE)
scheme, vesting in January 2025.

 

Interim results release and presentation

Mitie's interim results for the six months ended 30 September 2024 will be
released on Thursday, 21 November 2024.  A presentation for analysts will be
held at 9.30am.

 

H1 FY25 financials disclosed in the above trading update (and in the H1 FY25
results announced on 21 November 2024) are unaudited.

 

 

-     END -

For further information

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

 Group IR and 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 68,000 colleagues and is the leading
technology-led Facilities Transformation company in the UK. We are a trusted
partner to around 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 better decision-making.

In each of our core services of Engineering (Hard Services) and Security and
Cleaning & Hygiene (Soft Services) we hold market leadership 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.

Over the previous Three-Year Plan (FY22 - FY24) Mitie delivered a Total
Shareholder Return (TSR) of 80% (#10 in FTSE 250). Our new Facilities
Transformation Three-Year Plan (FY25 - FY27) will extend Mitie's market
leadership position through accelerated growth and deliver enhanced
shareholder returns.

We hold industry-leading ESG credentials, including a place on the CDP Climate
change A List, 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 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 joint ventures and associates

 2  (#_ftnref2) Total contract value (TCV), including estimates for projects
and variable works

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