TIDMMTO
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
GBP190m
Next GBP25m tranche of GBP50m 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
-- H 1 Group revenue [1] expected to be up by c.11% to GBP2.1bn
(H1 FY23: GBP1.9bn)
-- c.GBP2.2bn total contract value [2] ("TCV") of new contract
wins and extensions/renewals
-- GBP46m invested in five higher growth, higher margin strategic
bolt-on acquisitions
-- First GBP25m tranche of GBP50m share buyback programme
completed (26m shares purchased); next GBP25m tranche launched
today
-- Average daily net debt increased to c.GBP160m (H1 FY23:
GBP62m) and closing net debt to c.GBP115m (H1 FY23: GBP64m),
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.GBP5m)
-- FY24 expectation for operating profit before other items
raised to at least GBP190m, underpinned by g ood 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 GBP2.1bn, compared with the same
period last year (H1 FY23: GBP1.9bn). 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.GBP2.2bn TCV (H1 FY23: GBP1.5bn). 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.GBP160m (H1 FY23: GBP62m). Closing net debt at 30
September 2023 was c.GBP115m, an increase of c.GBP70m from 31 March
2023. This increase since 31 March 2023 reflects our good free
cashflow generation (c.GBP45m), offset by increased lease costs
(c.GBP10m), and capital allocations totalling GBP107m. The capital
allocations relate to the five acquisitions completed in the period
(GBP46m), dividends paid (GBP29m), shares bought back (GBP25m), and
share purchases for future employee incentive schemes (GBP7m).
Second tranche of share buyback programme launched
We have launched today the second GBP25m tranche of our current
GBP50m share buyback programme. In the first GBP25m 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 GBP190m, 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.GBP40m of revenue and c.GBP5m of operating
profit in H2 FY24 (included within our expectation for operating
profit of at least GBP190m, 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 .
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.
- END -
For further information
Kate Heseltine M: +44 (0)738 443 E: kate.heseltine@mitie.com
Group IR Director 9112
Claire Lovegrove M: +44 (0)790 027 E: claire.lovegrove@mitie.com
Director of Corporate 6400
Affairs
Richard Mountain M: +44 (0)790 968
FTI Consulting 4466
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 .
[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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END
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October 11, 2023 02:00 ET (06:00 GMT)
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