REG - MITIE Group PLC - Q1 FY26 Trading Update

MITIEAnnouncement

Tue 07:00

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RNS Number : 9363R  MITIE Group PLC  22 July 2025

22 July 2025

Mitie Group plc

Q1 FY26 Trading Update

 

Continued strong trading momentum: Q1 revenue growth of 10%

Acquisition of Marlowe plc expected to complete in early August

 

Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), the UK's leading
Facilities Management and Transformation company, provides a trading update
for the three-month period ended 30 June 2025 ("Q1 FY26" or the "period").

 

Q1 Highlights

 ·         Revenue 1  (#_ftn1) grew by 10.1% to £1,282m (Q1 FY25: £1,164m), including
           8.0% organic growth driven by net wins and scope increases, projects growth
           and pricing
 ·         Contract wins and extensions/renewals of £1.2bn TCV 2  (#_ftn2) against a
           record prior year comparative (Q1 FY25: £2.0bn), including several notable
           new key accounts
 ·         Record £29.0bn pipeline of bidding opportunities, up 22% over the period
           (FY25: £23.7bn)
 ·         Continued progress with margin enhancement initiatives; on track to mitigate
           the balance of the increase in employer's National Insurance Contributions not
           being commercially recovered
 ·         Closing net debt of £240m (31 March 2025: £199m), reflecting capital
           deployments, a seasonal working capital outflow and leases. Average daily net
           debt of £238m (Q1 FY25: £173m)
 ·         DBRS Morningstar confirm BBB investment grade credit rating remains unchanged
 ·         Creation of a market leader in 'Facilities Compliance', with c.£350m
           recommended cash and share offer receiving 98% support from Marlowe
           shareholders; completion expected 4 August

 

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

"In the first quarter of our new fiscal year we have maintained strong trading
momentum, with double digit revenue growth. Our core Facilities Management
offer grew by 7.3%, as we secured and extended a number of key accounts,
whilst Facilities Transformation - delivered through client projects work -
grew by 12.8%, against a strong prior year comparative.

 

"The acquisition of Marlowe, announced in June, represents a key step in our
Strategic Plan. Facilities Compliance is an increasingly business-critical
need for our customers, and we see significant opportunities to benefit from
greater scale in this high growth sector. The overwhelming support from
Marlowe's shareholders reflects the compelling strategic and financial
rationale for the Mitie offer, and will enable them to participate in further
value creation as Mitie shareholders. We look forward to welcoming the Marlowe
team and executing our integration programme, delivering at least £30m of
cost synergies and cross selling these high value services to Mitie's
customers.

 

"With today's strong update, we remain on track to deliver our ambitious
Strategic Plan, pivoting Mitie from being the UK leader in Facilities
Management to the leader in technology and project-led Facilities
Transformation and, with the acquisition of Marlowe, a leader in Facilities
Compliance."

 

Revenue growth

Revenue for the period increased by 10.1% to £1,282m compared with the same
quarter last year (Q1 FY25: £1,164m), significantly ahead of UK FM market
growth of c.3%. This strong performance included organic growth of 8.0%
(inclusive of 3.6% pricing), driven by net wins and scope increases on
existing contracts, alongside projects work. Infill M&A contributed a
further 2.1% of inorganic growth through the prior year acquisitions of Argus
Fire, ESM Power and Grupo Visegurity, all of which are performing strongly.

 

Contract wins and extensions/renewals

During the quarter we won, extended or renewed contracts with up to £1.2bn
TCV, following a record outturn in the same period last year (Q1 FY25:
£2.0bn), which had included two notable public sector wins totalling
c.£0.5bn and the extension of our largest private sector contract.

 

Notable new wins included IFM contracts for Aviva and Hull University Teaching
Hospitals NHS Trust, immigration services for the Home Office, security
services for the Metropolitan Police Authority, engineering services for
Transport for London and cleaning for Walgreens Boots Alliance.

 

Notable contract renewals and extensions included AS Watson Group, Central
London Community Healthcare NHS Trust, Defence Infrastructure Organisation,
Manchester Airports Group, Starbucks, Scottish Parliament and Transport for
London (security services).

 

Q1 FY26 Divisional performance

 

Business Services

Revenue of £598m was 16.6% better than the same quarter last year (Q1 FY25:
£513m), driven by net wins, scope increases, projects (including security
systems and other works for Scottish Power and integrated fire & security
systems for Google data centres), pricing and the contribution from prior year
acquisitions. All sub-divisions delivered good growth yoy, with the exception
of Central Government, which reduced by 6.1% due to the completion of certain
larger programmes of projects work in FY25. Revenue in our Spanish business
grew by 30.8% yoy, reflecting new contract wins, scope increases and the
acquisition of Grupo Visegurity.

 

Technical Services

Revenue of £466m was 5.0% better than the same quarter last year (Q1 FY25:
£444m), primarily driven by prior year wins (including Dublin City University
and Great Western Railway), scope increases and projects work (including
energy audits for McDonalds, a data centre grid connection for Telehouse West,
and the build of a data centre campus in Harlow), offset by one notable public
sector contract that was not renewed at the end of FY25.

 

Communities

Revenue of £218m was 5.3% better than the same quarter last year (Q1 FY25:
£207m), largely reflecting higher projects volumes and lifecycle works across
healthcare, local government and education contracts, pricing and net wins
(including HMP Millsike and Coventry & Rugby Hospital in the prior year).
 

 

Update on recommended offer for Marlowe plc

On 5 June, we announced the c.£350m recommended cash and share offer for
Marlowe plc ("Marlowe"), a leading business-critical services provider in the
fast growing £7.6bn Testing, Inspection and Certification market. The
combination establishes a market leading Facilities Compliance platform for
Mitie and accelerates the delivery of our Strategic Plan. The transaction has
received overwhelming support from Marlowe's shareholders, who voted 98% in
favour of the Court-sanctioned scheme of arrangement ("Scheme") on 16 July.
All regulatory approvals have also been met.

 

Subject to the satisfaction or waiver of the remaining conditions set out in
the Scheme document, the next milestones will be the Court Sanction Hearing on
31 July 2025 followed by the Effective Date of the Scheme (i.e. completion) on
4 August 2025.

 

 

 

Capital deployments

Our capital deployments are determined by the best use of capital to deliver
attractive returns to shareholders and drive growth in the business, while
maintaining a strong financial position, and leverage within our 0.75-1.5x
target range (post-IFRS 16 average net debt / EBITDA).

 

In light of the Marlowe acquisition, we have temporarily paused our £125m
share buyback programme (launched on 16 April). Within the programme, 2m
shares were purchased at a cost of £3m during the period, which are being
held in treasury to fulfil the 2022 Save As You Earn scheme. Separately, we
also purchased 12m shares at a cost of £15m into our Employee Benefit Trust
during the period to fulfil employee incentive schemes.

 

Mitie has a strong balance sheet and expects to deliver annual free cash flow
of £150m by FY27. Following the Marlowe acquisition, we expect leverage to
quickly reduce from the top end of our target range in FY26, through good free
cash flow generation and increasing profitability.  This will provide further
capital deployment opportunities, including the return of surplus funds to
shareholders via the recommencement of share buyback programmes. We will
maintain our progressive dividend policy (30-40% payout ratio) and continue to
pursue infill M&A opportunities that are a good strategic fit for our
business.

 

Net debt

Net debt at 30 June 2025 was £240m, an increase of £41m from 31 March 2025.
 This increase partially reflects an expected seasonal working capital
outflow, as we pay our supply chain for the increased volume of project works
undertaken in the final quarter of the prior year, as well as the ongoing
investment into our projects business. There have also been capital
deployments totalling £20m (the share purchases outlined above plus Landmarc
dividends) alongside a £1m increase in lease obligations as we continue to
transition our fleet to EV. Average daily net debt was £238m (Q1 FY25:
£173m).

END

 Revenue (including share of joint ventures and associates), £m   3 months to 30 June 2025  3 months to 30 June 2024  % Increase/(decrease)

 Business Services                                                598                       513                       16.6
    Security                                                      288                       231                       24.7
    Hygiene                                                       127                       109                       16.5
    Central Government(1)                                         93                        99                        (6.1)
    Spain                                                         51                        39                        30.8
    Waste                                                         23                        20                        15.0
    Landscapes                                                    16                        15                        6.7
 Technical Services                                               466                       444                       5.0
    Engineering maintenance and projects                          341                       326                       4.6
    Defence(1)                                                    125                       118                       5.9
 Communities                                                      218                       207                       5.3
    Local Government & Education                                  73                        66                        10.6
    Healthcare                                                    82                        77                        6.5
    Care & Custody(1)                                             63                        64                        (1.6)
 Mitie Group                                                      1,282                     1,164                     10.1

(1) Restated to reflect the changes to divisional reporting effective from 1
April 2024 (first reported in H1 FY25)

 

 

 

 

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 76,000 colleagues and is the leading
technology-led Facilities Transformation company in the UK. We are a trusted
partner to a diverse range of 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
projects capabilities in the areas of power and grid connections, building
fit-outs & 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, manufacturing, media,
retail & logistics and transport & aviation.

We hold industry-leading ESG credentials, including a place on the CDP Climate
change A List, and we have received multiple industry awards recently
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 seventh consecutive year and 'Britain's Most Admired Company' in the
Support Services sector. We are also ranked 16(th) in the Top 100
Apprenticeship employers and ninth in the Inclusive Top 50 UK Employers list.
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 work

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