19 November 2020

Mitie Group plc

Interim results for the six months to 30 September 2020

Weathering the COVID Storm: A resilient performance with much improved second quarter

Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), one of the UK's leading facilities management companies, today announces its financial and operational results for the six months ended 30 September 2020 ("H1 20/21").

H1 20/21 Highlights

  • Revenue from continuing operations of £972.4m, 9.8% lower than the prior year
  • Operating profit before other items of £21.5m (H1 19/20: £33.0m)
  • Order book of £4.0bn (H119/20: £4.1bn)
  • Basic earnings per share, before other items of 1.2p, (H119/20: 2.8p1)
  • Refinancing: Rights issue successfully completed, raising £190m of net proceeds and refinanced £250m Revolving Credit Facility until December 2022
  • Free cash inflow2 of £66.3m (H119/20 outflow of £66.3m)
  • Average daily net debt post-IFRS 16 significantly reduced to £69.3m (H1 19/20: £351.1m)
  • Closing net cash post-IFRS 16 of £89.7m (H1 19/20 closing debt of £235.9m)
  • Interserve Facilities Management acquisition completion expected on 30 November 2020 subject to shareholder approval. CMA approval received on 17 November 2020
  • No interim dividend being declared (H1 19/20 0.69p per share)

Results for the six months to 30 September 2020

Six months to 30

Six months to 30

£m unless otherwise specified

September 2020

September 2019

Before

Before

Change

other

other

before other

items2

Total

items2

Total

items, %

Revenue1

972.4

972.4

1,078.0

1,078.0

(9.8%)

Operating profit1

21.5

9.6

33.0

22.7

(34.8%)

Operating profit margin1

2.2%

1.0%

3.1%

2.1%

(0.9ppt)

Profit before tax1

14.0

2.1

24.9

14.6

(43.8%)

Profit/(loss) for the period

10.7

(3.9)

21.8

62.7

(50.9%)

Basic earnings/(loss) per share

1.2p1

(0.4p)

2.8p1,4

9.0p4

(57.1%)

Dividend per share

-

-

0.69p5

Average daily net debt (post-IFRS 16)

69.3

351.1

Period-end net (cash)/debt (post-IFRS 16)3

(89.7)

235.9

Secured order book1

£4.0bn

£4.1bn

Notes:

  1. From continuing operations.
  2. Other items are as described in Note 3 to the condensed consolidated financial statements.
  3. Note 13 to the condensed consolidated financial statements for analysis of net (cash)/debt.
  4. Earnings per share for H1 19/20 have been restated for the bonus element of the rights issue.
  5. Interim dividend for H1 19/20 was 1.33p; the subsequent 11 for 5 rights issue adjusts the dividend to 0.69p.

Commenting on H1 20/21 results, Phil Bentley, Group Chief Executive, said:

"Although COVID-19 continues to challenge us all, I am incredibly proud of how our business has responded and I am in awe of our 37,500 front-line heroes who have ensured we continued to deliver our exceptional customer service throughout the pandemic, keeping Britain's vital infrastructure open, supporting hospitals and food retailers and rapidly adapting to changes in customer requirements.

  1. EPS for H1 19/20 has been restated for the Rights Issue
  2. Free cash flow is defined in the Alternative Performance Measures appendix to the condensed consolidated financial statements

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"Our financial performance in the first six months of the year proved more resilient than expected with a much improved second quarter. Revenue of £972m was 9.8% lower than the prior year as discretionary variable works and engineering projects significantly reduced offset partially by growth in Business Services. Operating profit of £21.5m benefitted from management action to reduce costs at the start of the crisis.

"With COVID-19 changing the way we work our industry-leading technology of remote monitoring, risk analytics, and deep cleaning has created opportunities to win some important new customers, including Marks & Spencer, Morrisons and Royal London which are included within the £500m worth of new or renewed contracts in the period.

"Strategically we continue to make good progress against our Phase 11 transformation, 'Accelerated Value Creation'. Strengthening our balance sheet with the Rights Issue and refinancing of the revolving credit facility in June placed us in a strong financial position to acquire Interserve Facilities Management. With completion of this acquisition at the end of the month - subject to shareholder approval - we can drive faster growth and greater cost synergies, despite the challenges of COVID-19."

- END -

The Chief Executive's Review. Finance Review and Operating Review follow from page 4.

Analyst Presentation and Q&A

Phil Bentley (CEO) and Andrew Peeler (CFO) will host a presentation and Q&A session today (19 November 2020) at 9.30am via Zoom. For dial in details please contact Fiona.lawrenceIR@mitie.com. A copy of the presentation will be available on the Company website in advance of the live presentation. www.mitie.com/investors.

For further information please contact:

Fiona Lawrence

Group IR Director

M: +44 (0)738 443 9112

T: +44 (0) 7808727500

E: fiona.lawrenceIR@mitie.com

Claire Lovegrove

Head of Media Relations

T: +44 (0)203 123 8716

M: +44 (0)790 027 6400

E: claire.lovegrove@mitie.com

About Mitie

Founded in 1987, Mitie is one of the UK's leading facilities management and professional services companies. It offers a range of services including Technical Services (Engineering, Energy, Water and Real Estate Services), Business Services (Security, Cleaning and Office Services) and Specialist Services (Care & Custody, Landscapes and Waste Management).

Mitie employs approximately 48,500 people across the country, looking after a large, diverse, blue-chip customer base, from banks and retailers, to hospitals, schools and critical government strategic assets. It takes care of its customers' people and buildings, by delivering the basics brilliantly and by deploying advanced technology. It is pioneering technology, using smart analytics to provide valuable insight and deliver efficiencies to create outstanding work environments for customers.

Find out more at www.mitie.com.

The business continues to execute its technology-led investment strategy and in the past six months has received the following awards:

Corporate

  • Armed Forces Covenant signatory
  • Best Website, UK Digital Experience Awards
  • Bronze Award, Fleet Operator Recognition Scheme
  • CIPS Procurement Excellence Award
  • Gold Award, Defence Employer Recognition Scheme

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  • Inhouse Legal Team of the Year, LexisNexis Legal Awards
  • Institute of Internal Communications National Awards for Best News Magazine and Best Video Animation
  • IWFM COVID-19 Response Award: Keeping Good Work Going

Technology

  • The UK IT Industry award or the Artificial Intelligence/ Machine Learning project of the year with Esme Chatbot
  • Computing Digital Technology Leaders Award for Big Data / IoT Project of the Year
  • Data Into Insight and Artificial Intelligence & Machine Learning Project of the Year, Real IT Awards
  • Mitie Fire & Security Systems - Outstanding Security Installer/Integrator
  • Merlin Protect 24/7 - Mitie Security - Outstanding New Security Product
  • Mitie Security - Outstanding Contract Security Company
  • National British Security Awards: Best use of Technology
  • Verdantix Smart Building Innovation Award for Facilities Management Services

ESG

  • FTSE4Good Developed Index
  • Green Fleet of the Year, Business Car Awards
  • 'Low Risk' ESG rating from Sustainalytics
  • Most Inclusive Top 50 Company
  • Most Admired Companies
  • RE100, EP100 and EV100, The Climate Group
  • RoSPA Gold - Royal Society for the Prevention of Accidents
  • Top Employer, recognised by Top Employers' Institute

3

Chief Executive's strategic review

Our strategic transformation

Three years ago, Mitie set out a strategy to transform the business focused in Phase I on four strategic foundations of Customer, Technology, People and Cost. During this time the Group has been transformed through investing in customer service and in technology, by engaging with our people, reducing the Group's cost base and strengthening the balance sheet to ensure the Group is financially stable for the longer term.

Mitie has won significant customer contracts and our award-winning technology is now seen to be industry leading. There is extensive external recognition for engagement with our 48,500 people to create a 'Great Place to Work', under 'The Exceptional, Every Day' strapline.

Phase II of our transformation 'Accelerated Value Creation' builds on these foundations. Our belief is that greater scale will result in greater returns for our shareholders and our ambition is Leadership in customer experience; Leadership in the digital transformation of the industry; Leadership in ESG credentials and Leadership in margin performance, cash flow yields and value creation. And despite COVID-19, we have continued to make good progress over the last six months.

Mitie's market leadership position has led to some important contract wins - underpinned by our greater presence on Government Frameworks. New contract wins include Bravissimo, Gridserve, Magnox and Royal London as well as additional services to existing customers reflecting the role our Strategic Account Managers play in cross- selling our services.

Our technology platform is making a difference - Mozaic, Aria and Digital Workplace were key drivers in recent IFM wins due to their analytics, performance, and frictionless service. Providing Digital Workplace and Monitoring as additional services to existing customers opened up new revenue opportunities with Sainsbury's, Royal London and Thales. There are now 32 customers automatically served by 'chatbots'; 79 clients now with real time MI; and self-delivery and straight through processing in HR and Finance has advanced considerably. And we lead the industry in cyber resiliency.

Managing our costs and driving operational efficiency remains our focus - in addition to the proactive approach to cost reduction in light of the COVID-19 crisis, Mitie has continued to remove costs through the combination of Security and Cleaning, successfully integrating VSG and a programme to reduce divisional and group overheads.

Project Forte in Technical Services - creating the 'Amazon of FM' - has now fully restarted after pausing the project for 5 months. The project will now go live in December 2021, a year later than planned, in large part, due to the COVID-19 impact; the decision to extend the testing period; and the additional oversight required to ensure end-to- end integration across teams working remotely. This will incur an additional cost of £13m. Greater synergies have been identified to deliver improved net savings per annum of £20m (£35m gross) with this full run rate achieved a year later than expected in FY22/23. The investment to date totals £12m and we are expecting £3m savings in the current financial year.

Mitie is becoming recognised as an employer that cares about our people, the communities we serve and our impact on the environment. We have the best ESG rating amongst any FM provider globally. Mitie's engagement with its employees continues to improve - a milestone was achieved early in the pandemic when direct communication with all employees, whether on the front line or working from home, was achieved. Life Assurance for all employees whatever their age, an additional day's holiday for those working on the front line and a free Virtual GP Service have all been rolled out in the last six months. Mitie now has 790 electric vehicles on the road with an additional 600 on order, making extraordinary progress towards its industry-leading goal of net zero carbon by 2025.

The acquisition of Interserve Facilities Management, which is expected to complete on 30 November 2020 - subject to shareholder approval - is the next step in our strategic transformation.

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Mitie Group plc published this content on 19 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 November 2020 07:30:02 UTC