TIDMMTO
RNS Number : 4245A
MITIE Group PLC
29 September 2015
29 September 2015
Mitie Group plc
Pre-close trading update
100% integrated FM contract retention and new contract
awards
Mitie Group plc ("Mitie"), the strategic outsourcing company,
announces a trading update prior to entering a close period on 1
October 2015. Interim financial results for the six months ending
30 September 2015 will be announced on 23 November 2015.
Overview
Mitie has had a good start to the year with good organic revenue
growth driven by new and recently expanded contracts. 94% of
budgeted revenues for this financial year have already been
secured. In line with historic trends, overall performance will be
weighted towards the second half of the financial year, supported
by positive momentum on organic growth.
Mitie is now a purely services business, operating primarily in
our core market of UK facilities management (FM), which is
performing strongly. As guided, there are no further exceptional
costs relating to our exit from the construction market. Our social
housing business is performing well. The homecare market remains
challenging, however we are encouraged by the recent award of two
significant contracts, responsibly procured at sustainable
rates.
Recent progress
Developing and maintaining long-term client relationships is
critical to the growth and success of our business. As our largest
integrated FM contracts account for an increasing share of our
revenues, contract retention is something we are particularly
focused on. We have successfully extended all our major private
sector IFM contracts over the last 12 months and there are no
significant re-bids in this portfolio over the medium term. We have
made excellent progress during the year with the following
clients:
-- Rolls-Royce: we have been appointed preferred bidder to
continue providing our pan-European, integrated FM contract. The
renewed contract, our largest contract out to tender in this
financial year, builds on a 22-year relationship between Mitie and
Rolls-Royce.
-- Sky: we have extended our integrated FM contract for an
additional five years. Mitie has been working with Sky since 2012,
as part of a five-year contract; the new agreement extends this
partnership through to January 2023.
-- Vodafone: Gather & Gather, Mitie's catering business, has
been appointed preferred bidder for a new standalone contract to
provide all catering across Vodafone's UK estate. This will be
valued at approximately GBP8m per annum over five years.
-- RWE npower: we have been appointed preferred bidder for a
renewed contract providing integrated FM services across its UK
estate. It has an expected total value in excess of GBP30 million
over three years, with a further potential two year extension
period.
-- Media group: we have been appointed preferred bidder for an
integrated FM contract, having previously provided security to the
group. The expanded contract, which will be signed for a five year
term, has an expected total value in excess of GBP20 million, with
a further potential two year extension period.
We have also had success with developing important new client
relationships, and are very pleased with the positive momentum in
integrated FM, where we are the market-leading provider in the UK.
We have been awarded a range of new contracts with the following
clients:
-- Deloitte: we were appointed preferred bidder for a five year
integrated FM contract. The new contract has a total base value in
excess of GBP40m over the five-year period, with the potential to
add up to GBP2m per annum of reactive and project works. Mitie will
deliver services across Deloitte's entire UK estate of 34 offices
occupying 1.3 million square feet.
-- High street bank: we were awarded an integrated FM contract
with a new high street challenger bank. The new contract has a
total base value of GBP40m over a five-year period, with the
potential to deliver a further GBP20m of reactive and project
works. Mitie will work across the bank's entire UK estate,
including all of its office buildings and over 300 bank
branches.
-- Thales Group: we have been appointed preferred bidder for an
integrated FM contract, valued at GBP40m over five years, with
potential for further project work. Mitie will deliver services
across Thales' UK estate.
In our Homecare business we have been awarded two significant
new contracts. These are within the Royal Borough of Kensington and
Chelsea and the London Borough of Hammersmith and Fulham. The
combined value of both contracts is forecast to be in excess of
GBP5m per annum for five years, with an option to extend for a
further two years. Both contracts will be paying the London Living
Wage of GBP9.15 per hour.
Other developments
As a large employer, we welcome the recent budget announcement
that a new National Living Wage (NLW) will be introduced in the UK.
We are positive about this move, which ensures that those of our
people who are affected, are better rewarded and feel more
motivated to do the jobs they do. It will also improve retention
rates across our business.
Since the minimum wage was introduced in 1999, we have managed
the impact from its annual change as part of the normal course of
our business. We are confident that the contractual positions we
have across our client base will similarly ensure that the
introduction of the NLW will not have a material impact on our
future earnings.
We also believe that this is an important move for the
outsourcing industry, as it affects all competitors equally and
creates a level playing field in terms of bidding. We do expect
outsourcing prices to increase in the future and will not be
advocating job cuts in reaction to this change. However, we will
continue to work with our clients to identify cost efficiencies in
other areas. The initial response from our client base has been
supportive of our approach.
Outlook
The financial year has started well. We have a substantial order
book as well as a strong pipeline of sales opportunities and
positive momentum in our business, giving us confidence that we
will deliver good full-year organic revenue growth. We are
encouraged by the range of outsourcing opportunities across our key
markets and are confident that we will continue to build on our
long track record of sustainable profitable growth.
-Ends-
For further information, contact:
John Telling
Group Corporate Affairs Director, Mitie Group plc
T: +44 (0) 203 123 8673 M: +44 (0) 7979 701 006 E: john.telling@mitie.com
Erica Lockhart
Executive Affairs Director, Mitie Group plc
T: +44 (0) 203 123 8179 M: +44 (0) 7979 784 488 E: erica.lockhart@mitie.com
Notes for editors
What is Mitie?
Mitie is a FTSE250 strategic outsourcing company.
We work with people who want to perform better - now and in the
future. We help our clients to run more efficient and effective
businesses by looking after their facilities, their energy needs
and the people they're responsible for.
We're all about developing our people to excel every day,
challenge the status quo, and inspire change in the way people live
and work.
Find out more at www.mitie.com
This information is provided by RNS
The company news service from the London Stock Exchange
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