MITIE Group plc reports “strong core business performance” in half-yearly financials

In its half-yearly financial report for the six-month period ending 30 September 2014, MITIE Group plc has posted a headline revenue growth¹ of 4.8% (of which 3.9% was organic) and operating profits up 3.0% (2.2% organic) while the operating profit margin remains strong at 5.9%.

The company reports a headline cash conversion of 80.3%² (2013: 106.7%) and a statutory cash conversion of 128.6% (2013: 116.3%) above target KPI of 80%. Net debt as at 30 September 2014 is £233.8 million or 1.5x headline EBITDA³ (2013: £221.8 million, 1.5x headline EBITDA).

There has been “strong growth” of both headline basic EPS and dividend, which are up 5.1% and 6.1% respectively.

Strong organic growth in the Facilities Management business

• Sector-leading organic FM revenue growth of 6.3% and contract retention rate above 90%
• Rated as the top overall service provider* in the UK FM industry for the second year running
• Successful in retaining integrated FM contract with Vodafone for a further five years. Contract valued at £250 million
• Awarded a range of new FM contracts including those with Royal Cornwall Hospitals (valued at £90 million over seven years) and Heathrow Airport (valued at £40 million over three years)
• Successfully mobilised contract with the Home Office to run two immigration centres at Heathrow. Contract valued at £180 million over eight years
• Property Management division will enjoy a more buoyant second half supported by planned project works
• Challenging first half for the Healthcare division but confidence remains in terms of the long-term growth prospects in this market

Ruby McGregor-Smith CBE: CEO at MITIE Group plc

Exit from loss-making businesses complete this financial year

MITIE Group plc’s exit from its Mechanical and Electrical Engineering Construction business will be complete in this financial year. Losses of £6.9 million were incurred in this period. MITIE expects this to range between £11 million and £15 million for the full year (FY2014: £13.6 million).

The company has assessed all remaining risk on the design and build contracts left in its Asset Management business. Exceptional charges of £45.7 million were incurred (FY2014: £25.4 million) which cover all balance sheet exposures and all material expected future costs. Beyond these amounts, MITIE Group plc expects no further exceptional charges from either of these businesses.

Well positioned for the longer term

MITIE Group plc’s order book “remains healthy” and now stands at £8.5 billion (March 2014: £8.7 billion). 98% of 2014-2015 budgeted revenue has been secured (prior year: 99%) in addition to 72% of the 2015-2016 forecast revenue (prior year: 74%).

The bid pipeline has grown by 20% to £9.8 billion (March 2014: £8.2 billion). Continued investment is being made in the bidding, strategic sales and operational management capability across the group.

The company affirms that a “robust balance sheet and strong financial position” will support growth.

Commenting on the latest set of financials at MITIE Group plc, Ruby McGregor-Smith CBE – the company’s CEO – explained: “We have delivered a strong performance in our FM business during the first half of the year, and we expect to gain further positive momentum through the remainder of 2014. We have significantly de-risked our group by finalising the exit from our loss-making businesses. We’re now focused on investing in and maximising the long-term growth potential of our FM, Property Management and Healthcare businesses.”

McGregor-Smith concluded: “Our order book and sales pipeline are substantial. We’re in a good position to deliver growth and look ahead with confidence.”

References

¹Headline results exclude other items. Other items comprise exceptional charges in relation to design and build contracts in Energy Solutions of £45.7 million (2013: £nil), acquisition-related and integration costs of £0.6 million (2013: £2.6 million) and the amortisation of acquisition-related intangible assets of £5.1 million (2013: £5.6 million). They also include the results of the Mechanical and Electrical Engineering Construction business, with revenue of £3.8 million (2013: £41.2 million) and a trading loss of £6.9 million (2013: £4.3 million loss).
²Headline cash conversion calculated on a rolling 12-month basis (excludes the cash effect of other items)
³12-month rolling EBITDA
*i-FM Brand Survey

MITIE Group plc issues financial results for year ending 31 March 2014

Strategic outsourcing company MITIE Group plc – which delivers a range of services across the UK and Europe – has announced its latest set of financials, this time concentrating on the year ending 31 March 2014.

The headline results reflect strong revenue and earnings growth, with revenues up 8.2% to £2,142.6 million and operating profit before other items increasing by 6.0% to £127.5 million.

In this period, MITIE was awarded new contracts which include:

• a five-year £110 million contract extension with Capita to deliver integrated FM
• a new three-year £38 million contract with Mitchells & Butlers to deliver waste management services at 1,600 restaurants throughout the UK
• a new three-year £33 million contact to deliver technical FM for Four Seasons Healthcare
• a new three-year contract worth £5 million to provide FM services to Kellogg’s UK as well as European head offices in Manchester and Dublin

Speaking about today’s results, Ruby McGregor-Smith CBE (CEO of MITIE Group plc) commented: “We have made excellent progress, achieving sector-leading organic growth driven by new and expanded contracts as well as completing a bolt-on acquisition in healthcare. We’re very well positioned as one of the UK’s leading integrated FM providers, and we have also invested in higher margin markets such as homecare, all of which will support our growth aspirations.”

Ruby McGregor-Smith: CEO at MITIE Group plc

McGregor-Smith continued: “We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access bundled and integrated services. We’re confident that we will continue to build on our track record of delivering sustainable and profitable growth.”

The FTSE 250 company currently employs in excess of 70,000 people across the United Kingdom and Europe.

Excellent progress through focus on key growth markets

Strong financial performance
• Total headline revenue growth of 8.2% (of which 5.2% was organic)
• Headline operating profit up 6.0% to £127.5 million (2013: £120.32 million)
• Excellent conversion of EBITDA to cash of 107.3% (2013: 127.8%2 reported) and well above stated long-term KPI of 80% (Headline: 102.4%, 2013: 110.0%)
• Net debt at 31 March 2014 of £186.6 million or 1.6x statutory EBITDA (2013: £192.2 million or 1.9x statutory EBITDA)
• Total dividend for the year up 6.8% to 11.0 pence per share (2013: 10.3 pence per share)

Core facilities management business driving strong organic growth
• Sector-leading organic growth in FM of 7.2%
• Successfully retained a number of significant contracts, including Network Rail (£75 million over five years) and Capita (£110 million across five years)
• Awarded a landmark contract with the Home Office valued at £180 million over eight years, with responsibility for over 900 detainees at the Colnbrook and Harmondsworth Immigration Removal Centres near Heathrow
• Awarded a range of new integrated or bundled FM contracts valued in excess of £10 million per annum, including those with the Bank of Ireland, Mitchells & Butlers, Four Seasons Healthcare, an insurance company and a major online retailer
• Property Management business successfully mobilised a contract with London Borough of Hammersmith and Fulham (£200 million over ten years) and was also awarded a new contract with the Royal Borough of Kingston (£15 million over two years)

Entry into the healthcare market progressing well
• Integration of MiHomecare now complete. Continue to see substantial long-term opportunities to grow in the homecare care subset of the healthcare market
• Acquired Complete Group in January 2014 for £9 million, in turn adding complex care capabilities to the existing homecare proposition

Further de-risking the business
• Restructured the defined benefits pension scheme resulting in a one-off, exceptional net credit to the income statement under IAS 19 (revised) of £10.2 million and reduces future increases in pension contributions
• Close to completing an exit from the mechanical and electrical engineering construction business – exceptional losses of £13.6 million in the year (2013: £25.2 million including business closure costs)
• Reducing exposure to the design and build element of the former Asset Management business – one-off, exceptional charges of £25.4 million in the year (2013: £nil)

Well positioned for further growth
• Robust balance sheet and strong financial position will support growth
• 84% of 2014-2015 budgeted revenue secured (prior year: 85%)
• Sales pipeline buoyant at £8.2 billion (2013: £8.7 billion) and order book remains strong at £8.7 billion (2013: £9.2 billion)

Read the report in full

MITIE awarded Leadership Diversity Award at National Business Awards 2013

MITIE has been awarded the Leadership Diversity Award as part of the prestigious National Business Awards 2013, which took place in London.

MITIE was recognised for the exemplary steps it has taken to create a culture which promotes and enables greater diversity at the executive level, and for demonstrating the positive impact this has on commercial performance and operational excellence.

The outsourcer also fosters and promotes the importance of diversity not just within MITIE, but with its suppliers, clients and among the wider community.

MITIE has already achieved key milestones in the diversity arena:
• Appointing the first Asian Female CEO – Ruby McGregor-Smith CBE – in the FTSE 250 or 100
• It is one of only three companies in the FTSE 250 where two of the top three roles (CEO, finance director and chairman) are held by women*
• Established an externally-chaired Diversity and Inclusion Steering Group formed of senior operational leaders who are accountable for its agenda and outcomes
• Built a network of ‘Diversity Champions’ who are responsible for delivering business-specific diversity initiatives within every level of the organisation

MITIE’s CEO Ruby McGregor-Smith CBE accepts the Leadership Diversity Award

Speaking about the award, Ruby McGregor-Smith CBE said: “We were absolutely delighted to win the Leadership Diversity Award at the National Business Awards. Being part of a company that celebrates diversity in the broadest sense is something that we are truly passionate about at MITIE.”

McGregor-Smith went on to state: “Having a talented and diverse workforce is critical to both our past and future success as a business. It’s fantastic that our approach to diversity has been publicly recognised in this way, and we intend to continue leading the way in leadership diversity excellence.”

A very proud Ruby McGregor-Smith CBE with MITIE’s latest award

Now in their twelfth year, the National Business Awards are recognised as the UK’s premier cross-industry accolades for enterprise excellence.

Each year, over 1,200 business leaders from start-ups, social enterprises and SMEs through to mid-market, large family and FTSE-listed firms come together to celebrate the best of British business.

*(Source: Cranfield Female FTSE 2013 report)