REG - MITIE Group PLC - Q3 FY26 Trading Update

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RNS Number : 4334Q  MITIE Group PLC  27 January 2026

27 January 2026

Mitie Group plc

LEI number: 213800MTCLTKEHWZMJ03

 

Q3 FY26 Trading Update

 

Continued strategic momentum, with revenue up 10%

£74m free cash flow generated Q3 year-to-date

On track to deliver operating profit >£260m and FCF >£120m in FY26

 

Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), the UK's leading
Facilities Management, Transformation and Compliance company, provides a
trading update for the three-month period ("Q3 FY26") and the nine-month
period ("Q3 YTD") ended 31 December 2025.

 

Q3 FY26 and Q3 YTD Highlights

 ·         Sustained double digit revenue growth in Q3 FY26, up 10% to £1,447m (Q3 FY25:
           £1,314m), including 4% organic growth against a strong prior year comparative
 ·         Contract wins and extensions/renewals of £4.7bn TCV 1  in Q3 YTD (FY25 YTD:
           £4.8bn)
 ·         Pipeline of bidding opportunities up 28% to £30.4bn (end FY25: £23.7bn)
 ·         Good free cash flow generation of £74m in Q3 YTD (FY25 YTD: £59m)
 ·         48m shares (£71m) repurchased via buyback programme and for colleague
           incentive schemes YTD
 ·         Post-IFRS 16 average net debt of £402m Q3 YTD (2025 YTD: £249m), reflecting
           Marlowe acquisition
 ·         Marlowe bridge facility refinanced with £180m of US Private Placement notes
           in November
 ·         Marlowe integration progressing well: significant synergies and cross sell
           opportunities
 ·         Acquisition of Forest Group, a commercial refrigeration maintenance company,
           and RMS, an installer of large industrial heat pumps/heat exchangers with
           specialist skills in the Water industry

 Outlook
 ·         Significant contract award (up to $656m over eight years) in Q4 to Mitie
           (30%)/Amentum (70%) joint venture to provide FM services for US Navy at Diego
           Garcia military base
 ·         Double-digit revenue growth to continue in Q4; typically, our strongest
           quarter for revenue, operating profit and cash generation due to increased
           projects work and winter services
 ·         On track to deliver double digit revenue and operating profit growth to
           c.£5.7bn and at least £260m, respectively, alongside free cash flow of at
           least £120m in FY26

 

 

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

"We delivered another good trading performance in the third quarter, following
five consecutive half year periods of double-digit revenue growth -
significantly outpacing the UK FM market. The integration of Marlowe continues
at pace with the first synergies expected in the balance of the year. A number
of significant compliance bids have been submitted, and the client response to
our expanded offering after only five months of ownership is encouraging.

"Our pipeline and order book are at record levels, driven by long-term macro
trends, and the investments we have made in our capabilities, sales &
marketing and AI.

"We remain on track to deliver our FY25-FY27 Strategic Plan targets and have
built good foundations for sustained growth and shareholder value creation
beyond FY27, as we unlock the value in our customers' estates through our
Facilities Management, Facilities Transformation and Facilities Compliance
capabilities."

 

 

 

Revenue growth

Revenue in Q3 increased 10% to £1,447m compared with the same quarter last
year (Q3 FY25: £1,314m). Organic growth of 4% reflected net wins and scope
increases on existing contracts alongside projects work and pricing, against a
strong prior year comparative which had benefited from short-term 'surge
response' security work. M&A contributed a further 6% of inorganic growth,
primarily relating to the Marlowe acquisition.

 

Revenue also grew sequentially quarter-on-quarter, reflecting good trading
momentum. Q3 FY26 revenue was 4% better than Q2 FY26 (£1,395m), and 13%
better than Q1 FY26 (£1,282m). Q3 YTD revenue of £4,124m was 10% better than
the same period last year (£3,740m).

 

Contract wins and extensions/renewals

During the quarter we won, extended or renewed contracts with up to £0.9bn
TCV (Q3 FY25: £1.1bn). Contract wins and extensions or renewals of £4.7bn in
the nine months to 31 December 2025 were at a similar level to the prior year
(FY25 YTD: £4.8bn).

 

Notable new wins included a £100m per annum five-year hygiene contract for
TfL; hygiene and security services for Imperial College London and Universidad
Rey Juan Carlos in Spain; security services for Asda, Lidl and Eurostar; power
& grid projects work for Octopus Energy, Revera UK Operation and
Co-operative Group; and projects and compliance work for Lloyds Banking Group.
Notable contract renewals and extensions included KPMG Ireland; London Fire
Brigade; National Highways; Real Estate Management; and West Midlands
Ambulance Service NHS Trust.

 

Our bidding pipeline stands at £30.4bn (end FY25 £23.7bn), comprising
Facilities Management opportunities of £24.3bn (end FY25: £18.9bn) and
Projects opportunities of £6.1bn (end FY25: £4.8bn). The pipeline does not
yet include bidding opportunities relating to Marlowe, where we continue to
see significant potential for our expanded compliance offering.

 

Q3 FY26 Divisional performance

 

Business Services

Revenue of £789m was 21% better than the same quarter last year (Q3 FY25:
£650m), despite the prior year completion of short-term 'surge response' work
in Security and the completion of one notable public sector contract with
material projects work in Central Government. Growth was driven by
acquisitions (primarily Marlowe), net wins, fire safety & security
projects and pricing.

 

Hygiene & Environmental Services benefited from prior and current year
wins whilst in Immigration & Justice HMP Millsike became operational last
April. Growth in our Spanish business reflected new contract wins and the
acquisition of SPM in November, our third security business acquired in
Spain.

 

Technical Services

Revenue of £658m was 1% lower than the same quarter last year (Q3 FY25:
£665m), primarily driven by the loss of the low margin BBC contract at the
end of FY25, and the planned exit from unprofitable contracts in the telecoms
infrastructure business.  These reductions were partially offset by new
contract wins (such as with the Metropolitan Police Service) and projects,
including the construction of the second of four planned data centres at the
Kao Data campus in Harlow.

 

In Defence, growth was primarily driven by increased projects work across the
Landmarc military estate and overseas bases. The slight reduction in revenue
in Healthcare, Local Government and Education reflected contracts that were
not renewed, whilst the reduction from Q2 FY26 reflected seasonality in
planned capital projects in the Education sector, which typically peak during
the summer holiday period.

 

 

Marlowe integration

In August, Mitie extended its leadership position into the fast-growing
Facilities Compliance market through the acquisition of Marlowe, creating
unique 'Total Fire & Security' and 'Total Managed Water' offerings.

 

The Marlowe integration programme continues to progress well, with the early
delivery of synergies expected through the transfer of Marlowe's Alarm
Receiving Centre (ARC) operations to Mitie's ARC in Northern Ireland. Key
integration workstreams include optimisation of field force deployments onto a
single AI-enabled system; consolidation of certain roles and responsibilities
in Finance, HR, IT and Admin; rationalisation of the Marlowe property
portfolio; and the migration of Marlowe onto Mitie's cyber-secure and
AI-enabled systems, which has moved from planning to implementation with half
of the Marlowe workforce now on Mitie's payroll system.

 

We are also making good progress with the identification and implementation of
opportunities to cross sell Marlowe's regulatory-driven compliance services to
Mitie clients. We have established specialist sales capabilities, and we are
evolving our Total Managed Water offering into an integrated solution for long
term water resilience and sustainability, having engaged specialist
consultants to review the opportunities in the latest Water Industry
Regulatory Cycle (Asset Management Period 8; £104bn investment 2025-2030).

 

Recent awards to existing Mitie customers in Total Managed Water include to
University College London Hospitals, HMRC, Alder Hey Children's NHS Foundation
Trust and Russells Hall Hospital. Recent Total Fire & Security awards
include Heathrow Immigration Removal Centre and Rolls Royce. Additionally,
Mitie's existing compliance works that are subcontracted to third parties
continue to be transitioned to Marlowe.

 

Share buyback programme and share purchases for incentive schemes

Our current 12-month share buyback programme for £100m (launched on 14
October) is underway. In the year-to-date, 27m shares (£43m) have been
purchased at an average price of c.160p. This includes 2m shares (£3m)
purchased in the first two weeks of our previous programme (launched last
April), which was paused to accommodate the Marlowe acquisition. 22m shares
have been cancelled, and the remaining 5m shares have been held in treasury to
fulfil Mitie's 2022 Save As You Earn scheme, vesting in February 2026.
Separate to the buyback programme, 21m shares (£28m) have been purchased to
fulfil colleague incentive schemes.

 

Liquidity and funding

To facilitate the Marlowe acquisition, we put in place a £240m short-term
bridge facility, which was fully drawn down upon completion of the acquisition
in August. In October, £60m of the bridge loan was repaid, and the balance
was refinanced by the issuance of £180m of US Private Placement (USPP) notes
on 12 November. The new USPP notes have maturities of between 3-7 years with a
weighted average coupon of 5.44%. Mitie now has £360m of committed funding
with maturities between 2028-2034, at an overall weighted average interest
rate fixed at 4.65%, alongside a £250m Revolving Credit Facility maturing in
October 2028.

 

Net debt

Average daily net debt (post-IFRS 16) was £402m in Q3 YTD (FY25 YTD: £249m)
and period end net debt was £497m (end FY25: £199m). Excluding lease
liabilities of £207m, which largely relate to vehicles, period end net debt
(pre-IFRS 16) was £290m (end FY25: £2m).

 

The £298m increase in closing net debt reflects £363m of capital deployments
relating to M&A (including £228m cash consideration for Marlowe) as well
as dividends, share buybacks, share purchases for colleague incentive schemes,
earnouts and Marlowe transaction costs, alongside a £9m increase in lease
obligations due to the addition of Marlowe vehicles and leased properties.
These cash investments and returns were funded by good Q3 YTD free cash flow
generation of £74m (FY25 YTD: £59m), as well as additional USPP note
funding, in line with our FY25-FY27 target of 0.75-1.5x average daily net
debt/EBITDA (post-IFRS 16).

 

 

 

Outlook

We expect our double-digit revenue growth rate to continue in Q4, which is
typically our strongest quarter for revenue, operating profit and cash
generation, due to increased projects work in the public sector as well as
winter services.

 

Our continued good performance in Q3 underpins our confidence in delivering
double digit revenue and operating profit growth compared to the prior year,
and free cash flow of at least £120m in FY26.

 

Looking ahead, Mitie's momentum is underpinned by a record pipeline and order
book; positive macro trends in the built environment; and a business model
uniquely positioned as the UK leader in Facilities Management, Facilities
Transformation and Facilities Compliance. We therefore remain confident in
delivering our FY25-FY27 Strategic Plan targets.

 

END

 Revenue, £m                               Q3: 3 months to 31 Dec 2025  Q3: 3 months to 30 Dec 2024  % Increase/ (decrease)  Q2: 3 months to 30 Sept 2025  % Increase / (decrease)

                                                                        Restated(1)                                                                        Q3 v Q2 FY26

 Business Services                         789                          650                          21%                     741                           7%
    Security                               309                          283                          9%                      293                           5%
    Hygiene & Environmental                173                          161                          7%                      172                           1%

    services
    Central Government                     87                           91                           (4)%                    94                            (7)%
    Immigration & Justice                  83                           71                           17%                     78                            6%
    Marlowe                                76                           0                            n.m                     51                            49%
    Spain                                  61                           44                           39%                     53                            15%
 Technical Services                        658                          665                          (1)%                    654                           1%
    Engineering                            352                          370                          (5)%                    350                           1%
    Defence                                157                          144                          9%                      136                           15%
    Healthcare, Local                      149                          151                          (1)%                    168                           (11)%

    Government & Education
 Mitie Group                               1,447                        1,314                        10%                     1,395                         4%

(1) Restated to reflect the change in reportable segments effective from 1
April 2025 (first reported in H1 FY26)

 

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

 Neil Bennett                              M: +44 (0) 790 000 0777                  E: mitie@h-advisors.global (mailto:mitie@h-advisors.global)

 H/Advisors Maitland

 

About Mitie: The Future of High Performing Places

Founded in 1987, Mitie employs 84,000 colleagues and is the leading
technology-led Facilities Management, Transformation and Compliance company in
the UK.  We are a trusted partner to 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
hygiene (soft services) we hold market leadership positions.  We also deliver
transformational projects in the areas of power and grid connections, building
fit outs & modernisation, decarbonisation, fire safety & security and
telecoms infrastructure, alongside compliance capabilities in fire safety
& security and environmental services.  Our sector expertise includes
central government, critical national infrastructure, defence, financial
services, healthcare & life sciences, local government & education,
retail & logistics, manufacturing & media and transport &
aviation.

We hold industry-leading ESG credentials, including a place on the CDP Climate
change A List, and we have received multiple awards including Best Low Carbon
Solution and Net Zero Carbon Strategy of the year. We have validated
science-based targets that support our ambitions to reach Net Zero.  We have
been recognised as a UK Top Employer for the eighth consecutive year. We are
also ranked 16th in the Top 100 Apprenticeship Employers and tenth in the
Inclusive Top 50 UK Employers list. Find out more at www.mitie.com
(https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.mitie.com%2F&data=05%7C02%7CClaire.Lovegrove%40mitie.com%7Cd2d1ed53d7494b4f5d1608ddcea686e0%7C9e66e0b4768c4506a1b67e44c80595f2%7C0%7C0%7C638893936794778789%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=WzGlhZ8UAN0yTYDWe7yLrRnGZNbgLQw8E7Cm4zAF51A%3D&reserved=0)

 

 1  Total Contract Value (TCV); including estimates for projects and variable
work

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