Interim Results

MITIE Group PLC 11 December 2000 ------------------------------------------------------------------------------ EMBARGO: THE CONTENTS OF THIS RELEASE ARE SUBJECT TO EMBARGO UNDER STOCK EXCHANGE REGULATIONS UNTIL 0700 AM 11 DECEMBER 2000 ------------------------------------------------------------------------------ 11 December 2000 MITIE Group PLC INTERIM RESULTS FOR THE 6 MONTHS' PERIOD ENDED 30 SEPTEMBER 2000 AN ENCOURAGING FIRST HALF * Pre-tax profit up 29.8% to £10.9m (1999 - £8.4m) * Turnover up 22.8% to £199.3m (1999 - £162.3m) * Interim dividend per share up 22.2% to 1.1p (1999 - 0.9p) * Earnings per share up 25.7% to 4.4p (1999 - 3.5p) * Margin improvement sustained David Telling, Chairman, reports 'The Group has performed encouragingly in the first half. I am confident that we will be able to report a satisfactory result at the year end.' Notes: MITIE: Management Incentive Through Investment Equity. ACTIVITY: MITIE Group provides Support and Building Services to the owners and occupiers of commercial and industrial premises. FOR FURTHER INFORMATION: On 11 December 2000 David Telling, Chairman, MITIE Group PLC Mobile: 07979 701001 John Urquhart, Corporate Affairs, MITIE 020 7772 2582 Mobile: 07979 701006 Group PLC at Merrill Lynch International Corporate Switchboard: 020 7772 1000 Broking Subsequently - MITIE Group PLC, Head Office 01934 862006 MITIE Group PLC INTERIM RESULTS The following are the results for the six months ended 30 September 2000, together with figures for the same period in 1999. Six months Six months Year to 31 to to March 30 30 2000 September September (audited) 2000 1999 (unaudited) (unaudited) £000's £000's £000's Group turnover 199,293 162,274 346,514 Operating profit 10,857 8,483 19,488 Net Interest received/(paid) 12 (47) (248) Profit before taxation 10,869 8,436 19,240 Taxation (3,534) (2,777) (6,080) Profit after taxation 7,335 5,659 13,160 Minority interest (1,302) (982) (2,067) Profit for the period 6,033 4,677 11,093 Dividend (1,537) (1,229) (2,751) Retained profit 4,496 3,448 8,342 Earnings per share 4.4p 3.5p 8.1p Diluted earnings per share 4.3p 3.4p 8.0p Earnings per share before goodwill 4.5p 3.5p 8.5p amortisation Dividend The Board has declared an interim dividend of 1.1p per Ordinary Share (1999: 0.9p). The dividend will be payable on 30 March 2001 to all shareholders registered on 9 March 2001. Earnings per Share The calculation of basic and diluted earnings per share, using the principles of FRS 14, is based on the Profit for the period attributable to holders of Ordinary Shares. The weighted average number of Ordinary Shares in issue for the period was 138,014,225 (1999: 135,485,546) and fully diluted 141,155,639 (1999: 137,671,389). The calculation of earnings per share before goodwill amortisation is based on the profit after tax and minority interest, but before goodwill amortisation of £176,000 (1999: £60,000, year to 31 March 2000 £518,000). The figures for the year to 31 March 2000 have been extracted from the full accounts for the year which received an unqualified auditor's report and which have been lodged with the Registrar of Companies. A copy of this statement will be posted to all shareholders and will be available to members of the public from the Company's Head Office: The Stable Block, Barley Wood, Wrington, Bristol BS40 5SA. MITIE Group PLC INTERIM RESULTS Summary Group Balance Sheet At 30 At 30 At 31 September September March 2000 1999 2000 (unaudited) (unaudited) (audited) £000's £000's £000's Fixed assets 8,988 Intangible assets 44,319 3,268 4,283 Tangible assets 36,272 39,090 53,307 39,540 43,373 Current assets 86,152 70,787 76,468 Creditors (amounts falling due (84,122) (73,939) (75,964) within one year) Net current assets/(liabilities) 2,030 (3,152) 504 Total assets less current 55,337 36,388 43,877 liabilities Creditors (due after more than one year) (721) (494) (661) Provision for liabilities and charges (1,677) (1,188) (1,566) Net assets employed 52,939 34,706 41,650 Capital and reserves 6,963 6,826 6,851 Called up share capital Share premium account 13,440 6,749 7,067 Other reserves (519) (552) (524) Profit and loss account 24,002 14,640 19,506 Equity Shareholders' funds 43,886 27,663 32,900 Minority interest 9,053 7,043 8,750 52,939 34,706 41,650 MITIE Group PLC INTERIM RESULTS Summary Group Cash Flow Six months Six months Year to to to 30 30 31 March September September 2000 2000 1999 (audited) (unaudited) (unaudited) £000's £000's £000's Net cash inflow from operating 15,015 9,239 22,781 activities Returns on investments and servicing 36 (81) (347) of finance Taxation paid (1,929) (297) (6,556) Capital expenditure (10,139) (9,535) (16,143) Acquisitions (248) (134) (226) Equity dividends paid - - (2,451) Net cash inflow/(outflow) before 2,735 (808) (2,942) financing Issue of share capital 244 1,000 1,406 Cash inflow/(outflow) from increase/ 72 5 (4,935) (decrease) in debt Increase/(decrease) in cash in the 3,051 197 (6,471) period Reconciliation of net cash flow to movement in net debt: Increase/(decrease) in cash in the period 3,051 197 (6,471) Cash (outflow)/inflow from (72) (5) 4,935 (decrease)/increase in debt New finance leases - (111) (128) Movement in net debt in the period 2,979 81 (1,664) Opening net funds 1,036 2,700 2,700 Closing net funds 4,015 2,781 1,036 MITIE Group PLC INTERIM RESULTS Summary Group Cash Flow Continued Six months Six months Year to to to 30 September 30 September 31 March 2000 1999 2000 (unaudited) (unaudited) (audited) £000's £000's £000's Reconciliation of operating profit to operating cash flows: Operating profit 10,857 8,483 19,488 Depreciation 5,040 3,986 8,944 Amortisation of goodwill 176 60 518 Profit on sale of tangible fixed (130) (110) (727) assets Increase in work in progress and (6,287) (4,969) (16,049) debtors Increase in creditors 5,359 1,789 10,607 Net cash inflow from operating 15,015 9,239 22,781 activities Chairman's Statement Financial Overview Pre-tax profit for the half year amounted to £10.9m, an increase of 29.8% over the same period last year on turnover up 22.8% at £199.3m, reflecting a further improvement in margin. Earnings per share increased by 25.7% to 4.4p (1999: 3.5p). Interim Dividend The Board has declared an interim dividend of 1.1p per share (1999: 0.9p), an increase of 22.2%. This dividend will be paid on 30 March 2001 to those shareholders on the Register on 9 March 2001. Share Split A resolution will be proposed at an Extraordinary General Meeting to be held on 1 March 2001 that each Ordinary Share of 5p each in the capital of the Company be sub-divided into two Ordinary Shares of 21/2p each. We consider this to be desirable in order to increase their marketability and to widen their appeal. Segmental Analysis Turnover Pre-Tax Profit Pre-Tax Profit Six months to 30 September 2000 £000's £000's Margin % Building Services 114,318 5,335 4.7 Support Services 84,975 5,534 6.5 Total 199,293 10,869 5.5 Six months to 30 September 1999 Building Services 93,849 4,346 4.6 Support Services 68,425 4,090 6.0 Total 162,274 8,436 5.2 BUILDING SERVICES MITIE Engineering Services continues to lead the Division in profitability, its growth being especially strong in the refurbishment sector in the South East. Contracts have been secured in the period under review with Docklands Museum, One2One and Egg. Much of the work has been for clients in the IT and financial services sectors. Elsewhere noteworthy contracts for the Post Office, Dorset Police and Bristol Council in the South West and Rangers FC, Railtrack and OCCI in Scotland and the North have been supplemented by further work for our existing national clients, which include Cine UK, Cannon Leisure, BT and The Savoy Group. Our policy of partnering has continued to win a good forward workload. Training initiatives we have taken in supply chain management will enable MITIE Engineering Services to be at the forefront of the new, government led initiatives in working practices in the construction sector. MITIE Property Services has introduced a flooring service which is on target to produce revenues of £1million in its first year of trading. The existing businesses have benefitted from new long-term contracts with London Borough of Brent, West Lea Housing Association and PricewaterhouseCoopers, as well as the anticipated continued flow of work from Trillium. Three of our companies received external awards for performance excellence from the Post Office. MITIE Property Services (North West) Ltd won a national category Award in the Commercial Painter of the Year competition and MITIE Roofing (South East) Ltd won Contractor of the Year in its speciality. To augment the roofing businesses and expand geographically we acquired the business and assets of Roofing Services Ltd, which led to the establishment of new branches in Manchester, Dudley and Sheffield. Roofing's biggest contracts secured during the period were for Sainsbury's and Rolls Royce Motors, each well in excess of £250,000. We also acquired 60% of the issued share capital of The McCartney Group Ltd, specialists in passive fire protection measures. This is performing up to expectations and has won major contracts for BP Grangemouth, Glaxo Wellcome, BAA at Gatwick and for Merrill Lynch. MITIE Access Systems has continued to develop MITIE Generation through the introduction of new hire products. The company won a nine month rental contract at Canary Wharf and now operates as a national provider of safe access solutions. The access contracting businesses have grown their turnover and profits and won substantial work for Railtrack. Powered Access has over 500 machines and has seen a high rate of utilisation throughout the period. MITIE Lindsay has been structured into four operating units, known as North, South, HydroCat and Trades. The first two have continued to carry out the major part of their work for the Royal Navy and are actively pursuing new market sectors in commercial shipping, petroleum and steel structures. SUPPORT SERVICES MITIE Cleaning remains the largest discipline and has continued to grow by retaining its existing contracts and by winning new ones. Highlights of a good start to the year include the successful mobilisation of services at Falkirk Schools where MITIE provides all the support services and the plant replacement programme for the next 25 years. This contract is expected to have a full life value of over £30 million. Elsewhere in Scotland contracts have been won with Compaq for Waste Management and the high profile SECC for Security. In the North, we were awarded the contract to clean the Arndale Centre for Prudential and have won, as a result of niche marketing locally, over £1 million per annum of new public sector business in the education sector. Our recent initiatives in Waste and Hygiene have been rewarded with a satisfactory level of new contracts, while Security is also growing well with contracts started for Shell, Airtours and Philips. In the South of England the biggest contract win was with Barclays, which will increase annual turnover for that client from around £2 million to £5 million. Other noteworthy contracts with a value exceeding £250,000 per annum were for Unipart, Somerfield, United News & Media, Cargill, WH Smith and Willis as well as additional work for Prudential. The embryonic Catering company has won some high profile contracts, some in conjunction with other MITIE companies, but remains a small part of the Division. MITIE Maintenance has continued to perform well, winning work at Worldcom's new European headquarters in Reading and with Rampton Hospital. It successfully started the previously announced contract with Alliance & Leicester in July. These three contracts are together worth around £2.5 million per annum in turnover. The discipline is working closely with Building & Property Defence Ltd and has been awarded two further RAF stations in the MoD sector. MITIE Managed Services secured a five year contract worth £9 million a year with Sainsbury's which has now started, and a three year Facilities Management agreement with Alliance & Leicester. The new companies under the Managed Services' umbrella are MITIE Business Services Ltd which started in January and has won a number of three year contracts to supply office services, each worth over £1 million a year, and MITIE PFI Ltd, which was started this year to enter the Private Finance Initiative market in a more focussed way. Following Cleaning's successful pilot scheme with the Falkirk Schools, MITIE PFI Ltd has already secured preferred bidder status for a 25 year contract with the Education Link consortium for Newbury College. Conclusion The Group has performed encouragingly in the first half. I am confident that we will be able to report a satisfactory result at the year end. DAVID M TELLING Chairman

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