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

Posted On 10 Nov 2014
Comment: Off

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

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 (pictured)” 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

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.