Interim Management Statement

RNS Number : 4330W

MITIE Group PLC

28 January 2013

 



28 January 2013

MITIE Group PLC

Q3 Interim Management Statement

MITIE Group PLC ("MITIE"), the strategic outsourcing company, releases its Interim Management Statement for the period from 1 October 2012 to date.

Trading update

MITIE has made good progress over recent months with strong organic growth being driven by new and expanded contracts. The group is performing in line with management's expectations. At 30 September 2012, 98% of budgeted revenues for the current financial year had already been secured (30 September 2011: 97%).

We continue to expect total revenue growth to be higher in the second half than seen in the first half as a result of both the organic revenue contribution, including Lloyds Banking Group, and our healthcare acquisition, Enara Group.

Acquisition of Enara and the public sector

In the public sector, we remain focused on the healthcare, justice, local authority and social housing markets. We have seen a steady flow of opportunities across all our service lines.

In healthcare, we purchased Enara for £110.8m on 9 October 2012. Enara provides high quality home care to people who require help and support due to illness, disability or infirmity and is the fourth largest provider of home care services in the UK. We are pleased with the way the integration of Enara is progressing and see significant long-term opportunities in the UK healthcare market. We are already experiencing client demand for more integrated homecare services.

We continue to expect Enara's revenue and operating profit before other items for the full year ending 31 March 2013 to be £93m and £10.1m, respectively.

In the healthcare market we have also been awarded a £3m waste management contract with Kings Health Partners and have retained a £4.7m cleaning and environmental services contract with East Hull Primary Care Trust.

In the justice market there has been a shift in the prison outsourcing strategy. We expect to see opportunities for the outsourcing of the facilities management of prisons in 2013.

Within the local authority market, our painting business has been awarded a £30m repair and maintenance contract with the London Borough of Hammersmith & Fulham.

In social housing we have secured a £4m redecoration contract with Norwich City Council.

Private sector

The private sector continues to provide significant opportunities. Our five-year, £775m partnership to deliver integrated facilities management services for Lloyds Banking Group is progressing very well.

We have been awarded a contract to provide integrated FM services for British Sky Broadcasting Group (Sky). This contract is valued in excess of £100m over five years. The services we are providing include building fabric maintenance, engineering maintenance, energy management, catering, security, cleaning, mail room and couriers, helpdesk, switchboard, shuttle buses, grounds maintenance and internal landscaping.

We have been appointed by A2Dominion in a partnership to deliver reactive maintenance for 18,000 properties in Staines, Solent Area, Oxford and Kent. The 10-year agreement, starting in April 2013, has a total value of £94m and an option to extend for a further five years.

In the banking sector, we have been awarded a cleaning and environmental services contract with a value of £10m over three years, and we have retained a security contract with a value of £11m over three years. We have also been awarded a £4m technical facilities management contract with the DX Group and secured a £5m contract to supply a new Sentinel ID and competency management system on behalf of Network Rail.

Divestment strategy

Over the last five years we have seen fundamental changes in our sectors which in some cases we believe are structural.  Whilst we see significant opportunities in many areas - for example, within energy and integrated facilities management as well as healthcare - we believe some other areas will continue to be challenged. Going forward, we will actively seek to divest of cyclical businesses which are unable to reach our margin targets in the long term.

As we referred to in our interim results on 19 November 2012, we are continuing to reduce our activities in our cyclical mechanical & electrical engineering contracting businesses in certain regions of the UK that deliver large one-off projects.   

Financial position

On 13 December 2012 MITIE successfully completed an issue of US private placement loan notes with institutional investors for a value of £151.6m. The loan note issue was well supported by the market and notes were issued to a range of existing and new investors.  The notes were priced at highly competitive rates, with the blended average cost of the loan notes at 4.01%. The proceeds were used to repay bridging facilities that were put in place for the acquisition of Enara Group.  

The US private placement consists of £25m of notes denominated in sterling and fixed at 3.87% maturing in 10 years, £30m of notes denominated in sterling and fixed at 4.04% maturing in 12 years and $153m of notes denominated in US dollars (£96.5m) and fixed at 3.85% maturing in 10 years. The US dollar denominated private placement proceeds were swapped into sterling debt

Our balance sheet remains strong and will enable us to invest in organic growth and take advantage of value creating opportunities as they arise.

Outlook

The financial year is progressing well. Our core facilities management businesses are performing exceptionally well and they are expanding their order books.

Despite on-going weak economic conditions affecting our more cyclical markets and some delays in energy infrastructure projects, we remain very positive about the range of outsourcing opportunities across our key markets. We are confident that we will continue to build on our long track record of sustainable profitable growth.

-ENDS-

Future reporting dates

MITIE Group PLC will announce its full year results on Monday 20 May 2013.

For further information, contact:

John Telling, Group Corporate Affairs Director, MITIE Group PLC

T: 0203 123 8673           M: 07979 701 006         E: [e-mail]

Erica Lockhart, Head of Investor Relations and External Affairs, MITIE Group PLC

T: 0203 123 8179           M: 07979 784 488          E: [e-mail]

Notes for editors

What is MITIE?

We're the strategic outsourcing company. What does that mean in practice? We manage facilities, energy and properties for our clients across the UK and beyond.

We work with our clients in three ways; some take full advantage of our whole range of expertise, others may only need one aspect of what we do:

Strategy and consultancy

+ Facilities and energy management

+ Service delivery

Our strategic input can add value at the highest level by helping clients to manage their assets, while our practical management expertise can save customers money and reduce their carbon emissions.  We work with a vast number of clients in every industry across both the public and private sectors and deliver the broadest range of services that can be found in one place: from integrated facilities management to engineering maintenance to lifecycle energy management and much more.

There's a lot more to MITIE than you probably think. We're a big company with big ambitions - a leading FTSE 250 support services business, with more than 75,000 people, revenues over £2.0bn, and a reputation for being the best.

Visit us at www.mitie.com

 

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