Mitie Group plc issues interim financials for six months to 30 September 2020

Revenue from continuing operations stands at £972.4 million. That result is, in fact, 9.8% lower than for the equivalent period last year. Operating profit before other items is £21.5 million (the H1 results for the corresponding period in 2019-2020 being £33.0 million).

In terms of refinancing, the rights issue has been successfully completed, duly raising £190 million of net proceeds. The £250 million revolving credit facility has now been refinanced until December 2022.

Average daily net debt post-IFRS 16 has been significantly reduced to £69.3 million (H1 2019-2020: £351.1 million).

Completion of the much-publicised acquisition of Interserve Facilities Management is expected on Monday 30 November this year subject to shareholder approval. Competition and Markets Authority approval for the proposed deal was received on Tuesday 17 November.

Business Services division

The Business Services division of Mitie Group plc acts to keep some of the UK’s biggest companies and most iconic buildings across a variety of diverse vertical sectors (including transport and aviation, retail and distribution, Government and the public sector, Critical National Infrastructure and manufacturing) both secure and clean.

Security solutions-focused delivery for myriad clients encompasses security guarding as well as technology-backed monitoring solutions, in addition to fire and security systems installations.

This business division has seen organic revenue growth of 1.9% for H1 2020-2021, with an impressive customer retention rate of over 95% and key new contract wins with companies including Marks & Spencer, the Co-op and HMRC. Operating profit growth has been driven by a “strong performance” from the cleaning operation due to tighter cost controls, efficiency gains from restructuring and COVID-19 revenue streams.

The Business Services division has totalled £300 million worth of new or renewed contracts and boasts a net promoter score of +29.

COVID-19 challenge

Commenting on this latest set of financial results, Phil Bentley (CEO of Mitie) observed: “Although COVID-19 continues to challenge us all, I’m incredibly proud of how our business has responded and I’m particularly in awe of our 37,500 front line heroes who’ve ensured that we’ve 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.”

He continued: “Our financial performance in the first six months of the year proved more resilient than expected with a much improved second quarter. Revenue of £972 million was 9.8% lower than for the prior year as discretionary variable works and engineering projects significantly reduced, but this was partially offset by growth in Business Services. The Group’s operating profit of £21.5 million benefited from strategic management action to reduce costs at the start of the crisis.”

Bentley (pictured, right) went on to state: “With COVID-19 changing the way in which we work, our industry-leading technology for remote monitoring, risk analytics and deep cleaning has created opportunities to win some important new customers, including Morrisons and Royal London. These are included within the £500 million worth of new or renewed contracts in the period.”

Bentley concluded: “Strategically, we continue to make good progress against our Phase 11 transformation, namely ‘Accelerated Value Creation’. Strengthening our balance sheet with the rights issue and refinancing of the revolving credit facility in June has placed us in a strong financial position to acquire Interserve Facilities Management. With completion of this planned acquisition expected at the end of the month, subject to shareholder approval, we can then drive faster growth and greater cost synergies despite the challenges posed by COVID-19.”