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Mitie off to a strong start in FY23

Mitie has reported a strong start to FY23 with good continued momentum in its Q1 trading update.

Group revenue for the three months to 30 June 2022, including share of joint ventures and associates, was £945 million, 3% ahead of the same period last year (Q1 FY22 £917 million). Revenue growth, excluding Covid-related contracts was 16%.

Mitie also reported new contract wins, renewals and extensions including project work of up to £778 million total contract value (TCV) in the quarter. New wins of £203 million TCV include US Visiting Forces (for DIO), Hammerson, Poundland and GSK. Mitie’s extension and renewal rate is over 95%, with renewals or extensions for the DIO Ascension Islands, Cyprus and Falklands contracts, as well as Vodafone, Starbucks and Jones Lang Lasalle. So far in the second quarter contracts have been renewed with both Sainsbury’s and Sellafield.

Mitie has acquired three small, but high growth, high margin businesses during the first quarter of the year. The acquisition of two further telecoms site acquisition and maintenance companies, P2ML and 8point8, create a UK market leading Telecoms Support Services business for Mitie, whilst the acquisition of Custom Solar enhances the company’s decarbonisation offering.

These acquisitions take the total number of acquisitions to seven during the last 12 months, with a combined contribution of £17 million revenue in the first quarter of the year.

Business Services
Revenue of £304 million was 17% lower than the same quarter last year (Q1 FY22 £366 million), as Business Services delivered almost all of the short term Covid-related contracts in 2022, which have now ended. Excluding these contracts, underlying revenue increased by 11%, primarily due to the provision of Security at bridging hotels for Afghan refugees, and new contract wins including Hammerson andPoundland.

Central Government and Defence (CG&D)
Revenue in the first quarter of FY23 was £168 million, 16% ahead of the first quarter of FY22 (Q1 FY22 £145 million). The increase in revenue was due largely to the DIO (FDIS (Scotland & Northern Ireland)) contract, which was won in the prior year, and increased project work with customers. The division also successfully renewed or extended three MOD contracts in the quarter for DIO in the Ascension Islands, Cyprus and the Falkland Islands.

Revenue of £120 million was 10% ahead of the same quarter last year (Q1 FY22 £109 million), with the increased revenue coming from the new John Radcliffe hospital contract, and additional decarbonisation related project work.

Technical Services
Revenue of £257 million was 20% ahead of the same quarter last year (Q1 FY22 £214m), driven by FY22 contract wins including BAE Systems, Costa and Legal & General and the ongoing, gradual recovery in variable and project works.

The Telecoms companies acquired in the last 12 months (DAEL Telecoms, P2ML and 8Point8) have been successfully integrated into the Technical Services Telecoms division, which Mitie says is performing well, as is Rock Power Connections, which is now part of Mitie Energy.

Specialist Services
Revenue of £96 million was 16% ahead of the same quarter last year (Q1 FY22 £83 million), primarily driven by the Care & Custody division, where revenue increased by £10 million to £39 million (Q1 FY22 £29 million) due to the increase in the provision of Escorting Services, and the mobilisation of the new contracts for the Dungavel and Derwentside Immigration Removal Centres.

Looking ahead, Mitie says it is “encouraged by the strong start to the year”, which reflects the Group’s strategic focus on accelerated growth, adding that the Board therefore “remains confident” in the Group’s ability to deliver on its expectations for the year.

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