Key financial highlights see revenue from continuing operations up 11% to £1,078.0m , mainly due to the contribution from the acquisition of the Vision Security Group (VSG) and continued growth in strategic accounts (4%).
Operating profit before other items from continuing operations increased 5.4% to £33.0m due to improved contributions from Mitie’s Detention & Escorting Services contract and VSG, partly offset by lower renewal margins in certain contracts.
Mitie has continued to simplify the business by focusing on its core businesses and core customers. Mitie’s Security and Cleaning divisions have been consolidated under a single ‘Business Services’ management team. Whilst the company’s newly created ‘Technical Services’ division now incorporates both engineering maintenance and projects related to the physical upkeep of buildings, as well as ‘smart building’ management services including occupier services and water and energy management. Care & Custody, Waste and Landscapes have been consolidated into a single ‘Specialist Services’ division – these are higher growth opportunities with margins above the Group’s average.
In H1 19/20 Mitie sold its catering business to strategic partner CH&cO, which will continue to deliver catering services to Mitie’s integrated facilities management (IFM) clients.
Mitie is now halfway through its five-year transformation programme. Project Helix, phase 1 of Mitie’s transformation programme is being wound down and will conclude before the end of FY 19/20. Mitie expects costs of c.£3m for the full year (£2.0m in H1 19/20) to finish off a number of in-flight programmes.
Mitie is now six months into phase II of its transformation programme ‘Project Forte’ with a primary focus on its largest division, Engineering Services and delivering accelerated growth in shareholder returns. The two-year programme according to Mitie is “tracking to plan, with confidence in delivering overall gross benefits of c.£30m” (£25m for Technical services and £5m for group-wide automation and organisational consolidation).
Phil Bentley, Chief Executive of Mitie, commented: “Our strategy remains to focus on our core businesses and our strategic accounts, where our investment in technology distinguishes our offer and improves customer service and margins. During the last six months, we have seen modest organic revenue growth with a higher level of extensions and significant new wins, including our largest Integrated Facilities Management (IFM) account win for several years and our largest IFM account extension.
“The Catering disposal to our strategic partner CH&CO has strengthened our balance sheet and sharpened our focus on those business lines where we can secure a leading market position, underpinned by technology. Although still early days, we can see the success of this approach in our Security business where we continue to win market share.”