Mitie Group plc (“Mitie”), the strategic outsourcing company, announces a pre-close trading update before entering a close period on 1 April 2015. Preliminary results for the financial year ended 31 March 2015 will be announced on 18 May 2015.
Overview
We anticipate full year revenues to be broadly in line with market expectations, driven by our market leading facilities management (FM) business which is performing strongly. The extension of our integrated FM contract with Lloyds Banking Group in December was particularly significant; this contract now continues until 2022. Our homecare and social housing businesses have faced further pricing pressures in the second half of the year due to the impact of local authority spending cuts. We continue to invest in and support these businesses as we are confident of longer-term opportunities.
As a result of the market pressures in the homecare and social housing businesses we expect our full year headline operating profit to be slightly below current market expectations.
Recent progress
On 2 December 2014, we announced the extension of our transformational partnership delivering integrated FM for Lloyds Banking Group. We have been delivering integrated FM for Lloyds Banking Group for more than two years, as part of a five-year contract that commenced in 2012. The new agreement extends this partnership for the next eight years, through to the end of 2022. We continue to expand our range of services with them.
Also in the financial and professional services sector, we have been awarded a new, three-year cleaning contract with Santander, and have retained and expanded our bundled FM contract with Standard Life.
With Jones Lang LaSalle, we have been awarded a significant new contract to deliver a range of FM services across their property portfolio, with an estimated value of £24m per annum over a three to five year period.
We have made good progress in the technology and communications sectors, with new contract awards to provide FM for BBC Worldwide and Turner Broadcasting. Our catering business, Gather & Gather, was also awarded a landmark new contract with Intel in Ireland, with total contract values expected to range between €30m to €40m over five years.
Restructuring activities
The exit from our mechanical and electrical engineering construction business is complete. We now expect total losses for the year to range between £15m and £16m, and there will be no further exceptional items relating to this business next year or beyond.
In our Asset Management business, where we have assessed all remaining risk on the exit from design and build contracts, there will be no further charges beyond those reported at the half year.
Outlook
Mitie is in a strong position. We have repositioned the business and lowered our risk profile, having completed the exit from our loss-making mechanical and electrical engineering constructing and asset management businesses. Facilities Management now represents c.85% of group revenue, property management c.10% and homecare c.5%.
Looking forward, our focus is on generating profits backed by strong cash conversion, maintaining margins in our target range and continuing to grow the dividend. Our balance sheet remains robust and net debt is at a comfortable level. We 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