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- Mitie 'De-risks' to Focus on FM Core Business
19 May 2014 | Updated 01 January 1970
Mitie's preliminary results (to the end of march) seem to make relatively comfortable reading for shareholders - with one caveat...the cost of completing an exit from its mechanical and electrical engineering construction business. The bad news is hidden some way down the summary but reads:
Further de-risking the business
(We have) restructured the defined benefits pension scheme, resulting in a one-off, exceptional net credit to the income statement under IAS 19 (revised) of £10.2m and reduces future increases in pension contributions
We are close to completing the exit from our mechanical and electrical engineering construction business – exceptional losses of £13.6m in the year (2013: £25.2m including business closure costs)
We are also reducing our exposure to the design and build element of our former Asset Management business – one-off, exceptional charges of £25.4m in the year (2013: £nil)
Ruby McGregor-Smith, (pictured) Chief Executive of Mitie Group plc, commented:
“We have made excellent progress, achieving sector-leading organic growth driven by new and expanded contracts, as well as completing a bolt-on acquisition in healthcare. We are very well-positioned as one of the UK’s leading integrated facilities management providers and we have also invested in higher margin markets which will support our growth aspirations.
“We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access bundled and integrated services. We are confident that we will continue to build on our track record of delivering sustainable, profitable growth.”
Results for the Mitie Group as a whole show pre-tax profit up 4.3% to £113.3m with revenue up 8.2% to £2,142m.
The rest of the summary
Strong financial performance
Total headline revenue growth of 8.2%, of which 5.2% was organic
Headline operating profit up 6.0% to £127.5m (2013: £120.32m)
Excellent conversion of EBITDA to cash of 107.3% (2013: 127.8% (reported), well above stated long-term KPI of
80% (headline 102.4%; 2013: 110.0%2)
Net debt at 31 March 2014 of £186.6m or 1.6x statutory EBITDA (2013: £192.2m or 1.9x statutory EBITDA)
Total dividend for the year up 6.8% to 11.0 pence per share (2013: 10.3 pence per share)
Core facilities management business driving strong organic growth
Sector-leading organic growth in facilities management of 7.2%
Successfully retained a number of our most significant contracts, including with Network Rail (£75m over five years) and Capita (£110m over five years)
Awarded a landmark contract with the Home Office, valued at £180 million over eight years, with responsibility for over 900 detainees at the Colnbrook and Harmondsworth Immigration Removal Centres near Heathrow
Awarded a range of new integrated or bundled FM contracts valued in excess of £10m per annum, including with the Bank of Ireland, Mitchells & Butlers, Four Seasons Healthcare, an insurance company and a major online retailer
Property Management business successfully mobilised our contract with London Borough of Hammersmith and Fulham (£200m over ten years) and awarded a new contract with Royal Borough of Kingston (£15m over two years)
Entry into the healthcare market progressing well
Integration of MiHomecare is complete and we continue to see substantial long-term opportunities to grow in the homecare subset of the healthcare market
Acquired Complete Group in January 2014 for £9m, adding complex care capabilities to our homecare proposition
Well positioned for further growth
Robust balance sheet and strong financial position will support growth
84% of 2014/15 budgeted revenue secured (prior year: 85%)
Sales pipeline buoyant at £8.2bn (2013: £8.7bn) and order book remains strong at £8.7bn (2013: £9.2bn)
Article written by Brian Shillibeer | Published 19 May 2014
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