Mitie continues with good trading momentum

The FM provider has released its latest trading update for the three-month period ended 30 June 2024 (Q1 FY25), which reports growth in revenue of 10.5% to £1,164m compared with the same quarter last year (Q1 FY24: £1,053m).

Mitie says this “good performance” was driven by the contribution from prior year acquisitions, an increase in projects and variable work, and pricing, which more than offset net contract losses and the completion of certain short-term public sector contracts in the prior year.

The increase included organic growth of 4.4%, inclusive of 3.2% pricing, with infill M&A contributing a further 6.1% of inorganic growth.

Divisional performance

• Business Services – Revenue of £403m was 11.9% better than the same quarter last year (Q1 FY24: £360m).
• Technical Services – Revenue of £326m was 5.2% better than the same quarter last year (Q1 FY24: £310m).
• Central Government & Defence – Revenue of £217m was 4.3% ahead of the same quarter last year (Q1 FY24: £208m).
• Communities – Revenue of £218m was 24.2% ahead of the same quarter last year (Q1 FY24: £175m).

Contracts – During Q1 FY25 Mitie won or extended/renewed a number of significant contracts with up to £2.0bn TCV (Q1 FY24: £1.1bn TCV), following on from a record final quarter in the prior year.

Notable new ‘marquee’ Key Account wins included security services for Aldi, British Airways and Lidl, Community Health Partnerships cleaning and security, Dublin City University engineering services, EY IFM and projects, Halfords engineering and fire & security services, Home Office scope increases, and the Ministry of Justice Millsike Prison contract. Mitie also secured a further three-year extension with its largest private sector client, Lloyds Banking Group. Other notable renewals/extensions included Bank of Ireland, Bellrock, Marsh & McLennan Companies, NHS Property Services and Royal London Mutual Insurance.

Acquisitions – Mitie exchanged contracts to acquire high voltage electrical engineering business, ESM Power, shortly after the period end for £5.5m initial cash consideration. Expected to complete on 31 July 2024, Mitie says the acquisition will enhance its expertise in the growing high voltage power connections market, adding design capabilities, private network solutions and maintenance to support its customers in the upgrade and decarbonisation of their power requirements.

Mitie adds  it will continue to target higher growth, higher margin infill M&A to deepen its capabilities in the areas of Buildings Infrastructure, Decarbonisation and Fire & Security.

Mitie has also reported a good start to its new three-year programme of margin enhancement initiatives, which is on track to deliver c.£20m of cost savings in FY25.

Commenting on the results and outlook, Phil Bentley, CEO, said: “The good trading momentum from last year has continued into the first quarter of FY25, with double digit revenue growth from our Projects business, including the benefit from the previous year’s acquisitions. Contract wins and renewals also remained high, following a record final quarter in FY24, reinforcing the strength of our market leading, technology and data-rich capabilities.

“This will be a year of investment in our new Facilities Transformation Three-Year Plan (FY25 – FY27), through which we expect to accelerate growth and deliver superior financial returns, from adding further Key Accounts, growth in Projects and infill M&A.

“We have made a good start to our new programme of margin enhancement initiatives which will raise the operating margin over the medium-term, and we remain on track to deliver our high-single digit revenue growth expectations for the year.”