15 April
2024
Mitie Group
plc
LEI number:
213800MTCLTKEHWZMJ03
FY24 Full
Year Trading Update
Record revenue of at least
£4,500m (11% increase yoy)
Operating profit increased to
at least £200m (4.5% margin)
Share buybacks continue with
next £50m programme launched
Mitie Group plc ("Mitie" / "the
Group") (LSE: MTO), the UK's leading facilities transformation
company, today provides a trading update for the year ended 31
March 2024 ("FY24").
Highlights
·
|
Mitie's strong track record of
delivery continues: all medium-term targets met or significantly
exceeded in FY24, the final year of our Three-Year Plan
|
·
|
Record
revenue[1] of at
least £4,500m: an increase of c.11% yoy (FY23: £4,055m); Q4 revenue
growth of c.10% against a strong prior year comparative
|
·
|
Operating profit[2] increased to at least £200m, up
c.23% yoy (FY23: £162m)
|
·
|
Operating margin2 of c.4.5% achieved in FY24: strong
H2 operating margin of c.5%
|
·
|
Basic EPS2 expected to grow broadly in line
with operating profit, with lower net finance costs and share
capital reductions offset by a higher corporation tax
rate
|
·
|
Closing net
debt of c.£85m (31 March 2023: £44m), reflecting strong free cash
flow offset by increased shareholder returns, M&A and an
increase in lease obligations
|
·
|
Further £50m share buyback programme
commences today
|
Commenting on the outlook, Phil
Bentley, CEO, said:
"We are pleased with the performance of the business in FY24,
having delivered record revenue and operating profit, and an
operating margin of 4.5%. Free cash flow generation has been
strong, supporting our ongoing commitment to the return of surplus
funds to shareholders via share buybacks.
"Our focus on technology, innovation and our people underpins
our industry leadership in the UK, which is the largest and most
dynamic FM market in Europe. Our strategy for Facilities
Transformation will see Mitie extend its market leading position by
converting our record pipeline of opportunities into new Key
Accounts; accelerating growth in projects as we work with our
customers to transform their estates; and continuing delivery of
cost saving initiatives."
Trading update
Q4 FY24 revenue of c.£1,240m
increased by c.10% yoy (Q4 FY23: £1,127m), against a strong prior
year comparative for projects work. Revenue has exceeded £1bn in
each quarter of FY24, and has grown sequentially
quarter-on-quarter.
As a result of the strong trading
performance in the final quarter, we expect FY24 revenue to grow by
c.11% to at least £4,500m (FY23: £4,055m). This increase reflects
organic growth of c.7% from Key Accounts and Projects upsell, with
c.4% of inorganic growth. The largest contributors to the inorganic
growth were JCA Engineering, GBE Converge and RHI
Industrials.
We have continued to see sustained
demand from our clients for transformational projects across their
estates, driven by macro trends including decarbonisation, the
modernisation of the built environment, and changes in the
regulatory landscape. FY24 Projects revenue will exceed £1bn (FY23:
£0.8bn).
As a result of the uplift in Group
revenue, combined with our extensive programme of margin
enhancement initiatives and ongoing management of cost inflation,
we now expect operating profit before other items to be at least
£200m. This represents an increase of at least 23% on the prior
year (FY23: £162m).
With this outturn we will have
achieved the final target from our Three-Year Plan, reaching an
operating margin of c.4.5% in FY24. Our H2 performance exceeded
that of H1, both for revenue (H1 FY24: £2,132m) and operating
profit (H1 FY24: £85m), resulting in an operating margin of c.5% in
the second half of the year.
During the final quarter, we secured
a number of notable wins and scope increases including with Eastern
Police Forces for custody services, FDIS for decarbonisation
projects work, London Southbank University and WPP for IFM, and
Sainsburys and Lloyds Banking Group for additional security.
Notable renewals included with Associated British Ports, AWE, the
Department for Transport, GSK, HMRC, the Home Office, JLL and
Qinetiq. We are entering the new financial year with a healthy
order book and £19bn pipeline.
Infill M&A
We completed seven strategic
acquisitions for a combined consideration of £65m in FY24. Our
position as a leader in the intelligence and technology-led Fire
& Security market has been enhanced by four acquisitions,
including RHI Industrials (a leading installer of high-tech
security and access controls), and GBE Converge (a leading provider
of fire, security and ICT solutions). We also enhanced our
Mechanical & Electrical (M&E) engineering capabilities
through the acquisition of JCA Engineering, which is a leading
principal contractor for complex engineering projects, with a
particular focus on Data Centres and other critical
environments.
Net debt
Closing net debt (post-IFRS 16) at
31 March 2024 was c.£85m (31 March 2023: £44m). The increase in net
debt since 31 March 2023 reflects strong free cash flow generation,
offset by planned capital deployment actions and an increase in
lease obligations.
Total capital deployments of £149m
included the share buyback programme (£50m)[3], share purchases for employee incentive schemes
(£20m), strategic acquisitions (£65m) and dividend distributions
(£44m), partially offset by Landmarc cash acquired on consolidation
(£30m). There has also been an increase of c.£45m in lease
obligations as we transition our fleet to the more expensive
electric vehicles and extend the duration of the
leases.
FY24 average daily net debt is
expected to be c.£160m (FY23: £84m).
Capital allocation and share
buybacks
Our capital allocation policy
prioritises a progressive dividend; the purchase of all shares to
fulfil employee incentive schemes; strategic bolt on acquisitions;
and the return of surplus funds to shareholders, whilst ensuring
that we remain within our target leverage range of 0.75x to 1.5x
(average net debt / EBITDA).
Consistent with our policy, we are
continuing to buy back shares through a further £50m programme
which commences today. Within the programme, c.10m of the shares
purchased will be held in treasury to satisfy the 2021 Save as You
Earn (SAYE) scheme, vesting in January 2025. All remaining shares
purchased as part of the buyback programme will be
cancelled.
Over the past two years, 127m shares
have been purchased for £100m via share buyback programmes (of
which 95m have been cancelled), at an average price of 79p. A
further 71m shares have been purchased for £58m into our Employee
Benefit Trust (at an average price of 82p).
Full year results release and
presentation
Mitie's full year results for the
year ended 31 March 2024 will be released on Thursday 6 June 2024
and a presentation will be held for analysts at 9.30am.
- END
-
Full Year
Summary
|
FY24
Expected
|
FY23
Actual
|
Revenue
|
At least
£4,500m
|
£4,055m
|
Operating profit before other
items
|
At least
£200m
|
£162m
|
Average daily net debt
|
c.£160m
|
£84m
|
Closing net debt
|
c.£85m
|
£44m
|
FY24 financials disclosed in the
above trading update are unaudited.
For
further information
Kate Heseltine
Group IR & Corporate Finance
Director
|
M: +44 (0)738 443 9112
|
E: kate.heseltine@mitie.com
|
Claire Lovegrove
Director of Corporate
Affairs
|
M: +44 (0)790 027 6400
|
E: claire.lovegrove@mitie.com
|
Richard Mountain
FTI Consulting
|
M: +44 (0)790 968 4466
|
|
About Mitie
Founded in 1987, Mitie employs
65,000 colleagues and is the leading technology-led Facilities
Transformation company in the UK. We are a trusted partner to
c.3,000 blue chip customers across the public and private sectors,
working with them to transform their built estates, and the lived
experience for their colleagues and customers, as well as providing
data-driven insights to inform decision making.
In each of our core services of
Engineering (Hard Services) and Security and Cleaning & Hygiene
(Soft Services) we hold market leading positions. We also upsell
Projects capabilities in the areas of building fitouts and
modernisation, decarbonisation, fire & security, and telecoms
infrastructure. Our sector expertise includes Central Government,
Critical National Infrastructure, Defence, Financial Services,
Healthcare & Life Sciences, Local Government & Education,
Retail & Logistics and Transport & Aviation.
We hold industry leading ESG
credentials, including a CDP 'A' score, and in the past 12 months
we have received multiple industry awards including B2B Marketing
Team of the Year, Best Low Carbon Solution and Net Zero Carbon
Strategy of the Year. Targeting Net Zero by the end of 2025, our
ambitious emissions reduction plans have also been validated by the
Science Based Targets initiative (SBTi). We have been recognised as
a UK Top Employer for the sixth consecutive year. Find out more
at www.mitie.com.