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Mitie’s first half performance ‘more resilient than expected’

Mitie has reported that its financial performance in the six months to 30 September 2020 has been “more resilient than expected, with an improvement in the second quarter” due to the easing of lockdown rules.

The firm stated that its public sector contracts have shown “good resilience during this challenging period” and that it has also seen strong performances from food retail, online retail, healthcare and pharmaceuticals customers. Mitie also reported that Cleaning and Security showed some growth against the same period last year due to new public sector contract wins and additional work for existing customers, whilst Technical Services continued to see the impact across discretionary variable works and projects.

For the six months ended 30 September 2020 revenue from continuing operations was £972 million, 9.8% lower than the same period in the prior year (H1 19/20: £1,078 million). This revenue decline includes 3.5ppts from the loss of the MOJ contract and the reduced scope of the NHS Properties contract.

Operating profit before other items from continuing operations was £21.5 million, 35% lower than the same period last year (H1 19/20: £33.0 million) as the loss of revenue from high margin projects and variable works had a greater impact on profit. Mitie stated that “profit declines would have been greater had it not been for the cost saving action management took in March and April to reduce overheads“, some of which are permanent savings.

Mitie also reported the successful completion of a Rights issue during the period. raising £190 million of net proceeds and refinanced £250 million Revolving Credit Facility until December 2022.

Commenting on the interim results for the six months to 30 September 2020, Phil Bentley, Chief Executive of Mitie, said: “Although COVID-19 continues to challenge us all, I am incredibly proud of how our business has responded and I am in awe of our 37,500 front-line heroes who have ensured we continued to deliver our exceptional customer service throughout the pandemic, keeping Britain’s vital infrastructure open, supporting hospitals and food retailers and rapidly adapting to changes in customer requirements.

“Our financial performance in the first six months of the year proved more resilient than expected with a much improved second quarter. Revenue of £972 million was 9.8% lower than the prior year as discretionary variable works and engineering projects significantly reduced offset partially by growth in Business Services. Operating profit of £21.5 million benefitted from management action to reduce costs at the start of the crisis.

“With COVID-19 changing the way we work our industry-leading technology of remote monitoring, risk analytics, and deep cleaning has created opportunities to win some important new customers, including Marks & Spencer, Morrisons and Royal London which are included within the £500 million worth of new or renewed contracts in the period.

 “Strategically we continue to make good progress against our Phase 11 transformation, ‘Accelerated Value Creation’. Strengthening our balance sheet with the Rights Issue and refinancing of the revolving credit facility in June placed us in a strong financial position to acquire Interserve Facilities Management. With completion of this acquisition at the end of the month – subject to shareholder approval – we can drive faster growth and greater cost synergies, despite the challenges of COVID-19.”

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