Mitie Group plc, the facilities management organisation delivering a range of end user-centric services across the UK, has announced its results for the six-month period ending 30 September 2015. The FTSE 250 company’s latest set of financials reflect “strong revenue growth” up 2.6% to £1,123.1 million (of which 2.1% is organic growth). Overall performance will be weighted to the second half of the year.
Headline operating profit stands at £58.1 million. This represents a decline of 9.5%, largely reflecting a deterioration in the results of the business’ healthcare division.
On a far more positive note, though, and following completion of Mitie Group plc’s restructuring activities, statutory operating profit for the first six months of the year has increased from £5.9 million to an impressive £53.1 million.
There’s also a “strong” headline cash conversion of 101.2%. Net debt as at 30 September 2015 was £221.8 million or 1.5x EBITDA (HY15: £233.8 million or 1.5x EBITDA), while “continued good dividend growth” of 3.8% reflects “confidence” in future business performance.
The company is reporting a “good overall performance”. There has been a 100% contract retention rate in the integrated FM part of the business, for instance, with Mitie retaining the Rolls-Royce contract for a further five years, extended its deal at Sky for an additional five years and retaining business with RWE npower.
Mitie has also been awarded a range of new integrated FM contracts including those with dmg media, Deloitte, Thales Group and a major High Street bank. The combined total annual value here is in excess of £50 million.
There has been “strong organic revenue growth” in the property management arena driven in the main by good growth with existing clients.
In the aforementioned healthcare division, Mitie has “exited unprofitable contracts and consolidated branches”. Recent contract awards with the Royal Borough of Kensington and Chelsea and the London Borough of Hammersmith and Fulham are said to show the beginning of “a more positive trend” with the expectation of a return to profitability across the next 18 months.
Mitie is similarly “positive” about the introduction of the National Living Wage, which will ensure that many of the company’s employees are better rewarded and feel more motivated to do the jobs they do. At the same time, this will assist in improving staff retention rates across the business.
No material impact on future earnings is anticipated.
Well-positioned for the longer term
Mitie is talking of a “healthy” order book which stands at £8.5 billion (March 2015: £9.0 billion) and a sales pipeline at £9.2 billion (March 2015: £9.7 billion).
Some 97% of 2015-2016 budgeted revenue is secured, so too 68% of 2016-2017 forecasted revenue.
Speaking about these half-year results, Ruby McGregor-Smith CBE (CEO of Mitie Group plc) commented: “Mitie has had a positive start to the year. Our focus on the services sector, and primarily in facilities management, will ensure that we continue our long-term track record of sustainable and profitable growth. We’re the market leader in integrated facilities management and particularly pleased with recent contract awards and retentions. This gives us confidence we will deliver a good, full-year performance.”
One of those recent awards is a prestigious security contract with E.ON, one of the world’s largest electric utility services providers.
As part of a competitive tendering process, Mitie’s Total Security Management (TSM) business has been successful in securing a two plus two-year contract at all of E.ON’s UK sites, delivering 24-hour security personnel.
Mitie was awarded the contract based on its proven expertise in critical security environments in addition to the business’ online operations software, Workplace+, which affords the client access to all-important, accurate and real-time contract management information.
Jason Towse, managing director of Mitie’s TSM business, told Risk UK: “We’re extremely excited to be working with E.ON. This is a sector where we can deliver subject matter expertise to enhance the relationship through implementing Best Practice and information sharing with other security-critical environments.”
George Moss, security operations manager at E.ON, added: “The award of this contract recognises Mitie’s experience in the sector and commitment to training and developing staff in order to provide high standards of performance. I hope that, through a mutually supportive relationship between E.ON and Mitie, we can achieve the primary objective of promoting a safe and secure environment for our employees and contractors as well as visitors to all our sites.”
Security contract with Aberdeen Harbour
Mitie has also just been awarded a three-year security contract with one of the busiest trust ports in the UK, namely Aberdeen Harbour.
The contract will see Mitie’s TSM business delivering security services throughout four key areas in the harbour, along with two minibus shuttle services and a dedicated mobile response vehicle.
Mitie’s specialist transport and aviation division comprising over 30 knowledgeable personnel will work to Department for Transport standards and in accordance with the International Ship and Port Facility Security (ISPS) Code in order to deliver high quality services.
Aberdeen Harbour is a world-renowned port handling around 8,000 vessel arrivals on an annual basis and 4.75 million tonnes of cargo valued at approximately £1.5 billion for a wide range of industries.
It’s the centre of activity for the offshore oil and gas industry’s marine support operations in North West Europe, the principal commercial port in northern Scotland and an international port for general cargo, roll-on/roll-off and container traffic. The port is a marshalling point for exports of oilfield equipment and experienced in handling equipment for renewable energy projects.
Jason Towse commented: “I’m delighted that we’re working with Aberdeen Harbour in delivering a partnership to keep this critical port safe and operational. We have significant experience in delivering highly-skilled personnel in such regulated environments and understand the requirements to deliver the specialist security service.”