TIDMMTO
RNS Number : 9148H
MITIE Group PLC
16 March 2018
16 March 2018
Mitie Group plc
Pre-close Statement
Mitie Group plc ("Mitie" or "the Group"), the UK's leading
facilities management business, today publishes its pre-close
statement for the financial year ending on 31 March 2018
("FY17/18"). Mitie will be in a close period between 1 April 2018
and the scheduled publication of its financial and operational
results for FY17/18, on Thursday, 7 June 2018.
Highlights
-- Modest growth in overall sales
-- Debt levels comfortably within banking covenants
-- Operating profit in line with our expectations, slightly
down on previous year due to investment in customers, IT
and capability
-- Cash generation impacted by higher costs of change, reduced
reliance on invoice discounting and normalisation of our
balance sheet
-- Higher total cost savings expected from Transformation Programme,
with associated higher cost of change
-- Technology-led Connected Workspace strategy helping to drive
top-line growth
-- Improving operational delivery to clients, with better year-on-year
Net Promoter Scores
Project Helix
-- On track to exceed 3-year cost targets
-- Finance transformation largely concluded, with back-office
operations outsourced
-- Investments made in customer service and sales capability;
commercial reorganisation complete
-- Cleaning workflow programme concluded with new IT solution
in operation
-- HR transformation launched across Group with IT provider
mobilised
-- New Group legal structure with effect from 1 April
-- Engineering transformation scoping begun, focused on Asset
& Workflow Scheduling
Phil Bentley, CEO, said:
"We are one year into our Transformation Programme and we are
making progress. Our order book is solid and revenue is up
year-on-year. Project Helix is starting to deliver cost savings. We
have upgraded our sales and customer service capability, and we
continue to invest in talent and technology.
"The liquidation of Carillion has raised some fundamental
questions about the outsourcing industry. Managing the buildings
and the workplaces of our clients is a complex business, but our
expertise, scale and focus continue to be valued by our
clients.
"We remain focused on delivering exceptional FM services and
rolling out our Connected Workspace technology to provide advanced
analytics, delivering trusted advice and valued insights. The year
ahead will remain challenging as we continue to transform Mitie,
but we expect to see modest revenue growth with improved profits
and cash flow generation."
Trading update
Revenue
Revenue growth is expected to be in the range of 2.0-2.5% at
GBP2.2 bn. This includes the Property Management division, which
has been re-incorporated into the Group figures after the
withdrawal from sale announced on 5 December 2017.
This year-on-year organic growth has been driven by solid
performances across all divisions. In particular, strong project
work volumes in Engineering Services, increasing technology content
in Security and new business wins in Care & Custody have
contributed. Cleaning revenues have stabilised, having recently
declined. This has been partially offset by weak performances in
Property Management and contracts losses early in 2017 in Waste,
part of Professional Services.
Order book
The most significant win in recent months was the detention and
escorting contract in Care & Custody, valued at GBP525 million
over 10 years - doubling the size of the division. The division was
also successful in securing a number of other significant wins, in
custodial services and forensic medical examiner services.
In Cleaning, we won a significant contract with an NHS Trust,
and added services at Heathrow Terminal 5.
Engineering Services won a multi-year contract with a major food
retailer, a 3-year extension with Heathrow Airport, and further
work with the Scottish Government. We also retained a significant
contract with an NHS Trust. This offsets the previously announced
loss of a top 20 contract and of another due to a merger of a
client.
In Security, we have recently won a new customer in the Royal
Academy, as well as a technology-led contract at a global financial
organisation. Our Fire and Security Systems, Document Management
and Vetting businesses have experienced a solid stream of business
opportunities.
Professional Services continues to win consultancy and project
management work, as our Connected Workspace offer moves from pilot
phase into deployment. We opened our Technology Centre in Bracknell
and continue to work with various world-class technology
partners.
Catering has won a contract with a major online retailer in
Ireland and a contract for a major music festival in the UK, which
will partially offset the loss of a contract with a UK
retailer.
Property Management, despite facing difficult trading
conditions, has won a large multi-year contract for social housing
maintenance and a number of contracts within its painting
business.
Transformation Programme (Project Helix)
We remain focused on reducing operating costs, increasing
productivity and efficiency through simplification, rationalisation
and automation. While the transformation of a large people-led
organisation such as Mitie is not linear, we are making solid
progress and the medium-term opportunities are significant.
We expect the Helix programme to conclude by summer 2020,
delivering c.GBP50m of overall run-rate savings (c. 10% uplift on
previous guidance), by March 2020.
We expect costs associated with Project Helix in FY17/18 to be
c. GBP35m, compared with our previous guidance of GBP24m. The main
drivers of uplift are acceleration of our property portfolio
consolidation and higher transformation-related consultancy
support. Incremental costs include those associated with de-risking
the year-end in our finance transformation, retaining on-shore
capabilities for longer than originally anticipated.
Cash and Covenants
We expect average daily net debt to be down GBP50m year-on-year
and we continue to reduce our reliance on period-end invoice
discounting. As a result of our more conservative approach and our
commitment to normalising our balance sheet by reducing the
company's reliance on non-committed facilities, we expect period
end net debt to be GBP50-GBP70m higher than last year. We expect to
continue to comfortably operate within our banking covenants.
Sector backdrop
The Facilities Management sector has been in the spotlight in
the last few months. Mitie has actively engaged with its customers
and stakeholders during this period, providing context and
assurances. We have seen limited impact on our operational business
as a result of competitor or industry activity, and we remain fully
focused on our transformation programme and the execution of our
strategy. Potential Brexit impacts are expected to be minimal,
though could be felt in wage inflation and we have budgeted for
increasing remuneration costs in FY18/19.
Full year results
The Group will announce its full-year 2018 results on 7 June
2018.
The full impact of IFRS15 is still being assessed: further
analysis will be provided at the year end.
Analysts and investors conference call
Mitie will be hosting a conference call at 08:00am GMT on
Friday, 16 March 2018 for analysts and investors with Phil Bentley,
CEO, and Paul Woolf, CFO.
Dial-in details are as follows:
UK +44 (0) 333 300 0804
Access code: 67151754#
Playback details:
UK +44 (0) 333 300 0819
Access code: 301224181#
For international dial-in and playback numbers please contact
Anna Gavrilova on anna.gavrilova@mitie.com.
For further information please contact:
Tori Cowley
Group Director of Investor Relations & Corporate Affairs
T: +44 (0) 203 123 M: +44 (0) 781 852 E: tori.cowley@mitie.com
8705 8110
Anna Gavrilova
Head of Investor Relations
T: +44 (0) 203 123 M: +44 (0) 738 443 E: anna.gavrilova@mitie.com
8675 9112
Notes for editors
About Mitie Group
Founded in 1987, Mitie is the UK's leading facilities management
and professional services company. We offer a range of specialist
services including Security, Engineering Services, Catering,
Cleaning, Pest Control, Landscaping, Energy and Property
Consultancy, Property Maintenance, and Custody Support
Services.
Mitie employs 53,000 people across the UK, looking after a
large, diverse large blue-chip customer base, from banks and
retailers, to hospitals, schools and government departments. We
take care of our customers' people and buildings, by delivering the
basics brilliantly and by deploying advanced technology. We are
pioneers in the Connected Workspace, using smart analytics to
provide valuable insight and deliver efficiencies to create
outstanding work environments for customers.
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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