From the Blue Index blog

All-MITIE

May 18th, 2009

Further evidence emerged today of how companies are outsourcing to save money. Building services group MITIE Group (MTO) reported a 12 percent hike in annual pre-tax profits to GBP75.9m, on revenues ahead 8.2 percent to GBP1.5bn. Additionally, MITIEs forward order book increased to GBP4.9bn from GBP4.4bn last time, and the group are benefiting from a sustained level of outsourcing as contracts become larger and longer term. Looking forward, the company also said it is extremely well positioned for acquisitions and buying up companies which fit the existing business.

Analysts are very positive over the results, remarking the results are strong, with high visibility and positive outlook resulting from MITIE clients increasing outsourcing to improve efficiency and to cut costs.

If like me you have tracked the share price performance of companies providing outsourcing during the downturn, such as Compass Group (CPG) and Capita (CPI), youll find that almost without exception, these companies are very positive in outlook, with clear revenue visibilities.

Full transcript here
http://blog.blueindex.co.uk/2009/05/all-mitie/

04th Feb 2014 half yearly divi payment date. 19th May preliminary statement of annual results.

Stop raised to 320.0 to lock in + 30

Stop to 325.0 to lock in + 35.

330.0 breached, all time high albeit on low volume.

Out the spreads (for now) target 330.0 + 40

Sp bang on 25DMA support 320.0p. Interim next Monday. Obvious profit taking on market downturn. Watching, may be worth a punt long.

3 February 2014

Mitie Group plc



Q3 Interim Management Statement



Mitie Group plc ("Mitie"), the strategic outsourcing company, releases its Q3 Interim Management Statement for the period from 1 October 2013 to date.



Trading update

Mitie has made positive progress over recent months with good organic growth being driven by new and expanded contracts.



We are continuing to successfully re-position the group to target higher growth and higher margin areas. Our long-term strategy is focused on growing in our core markets of facilities and property management, which are differentiated by our specialist energy consulting services. Healthcare is the other key part of our growth strategy, where we are concentrating on the homecare market. In addition, we are continuing with our phased exit from the lower-margin, cyclical elements of our business, including our mechanical and electrical engineering contracting businesses, and the construction element of our asset management business.



As reported at the interim results, 99% of budgeted revenues for the current financial year had already been secured at that time (prior year: 98%).



Facilities Management

Our Facilities Management division is continuing to deliver strong organic growth and we are seeing an uplift in the level of bid activity across our businesses in both the public and private sectors. We have a robust sales pipeline and see increased potential to further benefit from the trend towards bundling and integration of more services. This division has a number of exciting growth opportunities and is well positioned to deliver further growth.



We have successfully secured and extended a number of contracts for new and existing clients, including with:

· Four Seasons Healthcare: commenced a new contract in January to deliver technical FM across its estate of care homes, with a total value of £33m over three years

· The London Borough of Sutton: a new contract delivering technical FM, with a total value of £15m over seven years, with a further potential three-year extension

· The Maritime & Coastguard Agency: a new bundled FM contract with a total value of £4m over three years

· A British shoe manufacturer: a new contract, subject to final negotiations, providing bundled FM with a total value of £4m over three years

· AWE, the Atomic Weapons Establishment: retained and expanded our partnership to deliver bundled FM, with a contract value of approximately £50m over five years

· Luxury carmaker: retained and expanded our contract to deliver range of cleaning and environmental services for a further five years, with a total value of £25m

· Eurotunnel: retained and expanded a total security management contract with a total value of £12m over three years

· National Grid Plc: a new total security management contract with a total value of £4m over six years



Property Management

The Property Management division has seen some delays in the commencements of new contracts, but has experienced improving market conditions in recent months. In particular, in the social housing market we are seeing an increasing trend towards longer-term, larger, bundled contracts incorporating more service lines across larger portfolios. Our housing repairs and maintenance contract with Hammersmith & Fulham Council commenced successfully in November - this contract together with our painting contract, have a total value of £28m per annum over ten years.



We have been awarded a contract with Southampton City Council to deliver Energy efficiency measures to council properties. Despite the recent Government announcement relating to the reduction in ECO funding these works will still proceed and the contract is likely to provide £10m of revenue over the next 12 months. We have also been selected to deliver capital works improvements for the Royal Borough of Kingston on Thames 'Better Homes Initiative' with a total value of £25m over four years.



Our roofing business has been awarded new contracts with Mercedes Benz and Alstom Grid, with total values of £3m and £2m over a twelve-month period, respectively.



Energy Solutions

Within our energy solutions division, the higher margin consultancy services led by Utilyx continue to perform well, driven by an increasing interest in energy consultancy from our existing FM clients.



We are continuing to reduce our exposure to the loss-making, construction element of our Asset Management business, which has become part of the Energy Solutions division. We are seeing ongoing project delays, which together with one-off costs associated with exiting a small number of these sizable contracts, is resulting in continued underperformance in this area of the business.



Healthcare

The integration of MiHomecare is on track, the business is performing to plan and a growing pipeline of opportunities is emerging. MiHomecare was recently appointed to a new two-year framework to provide care services across Peterborough, with a further potential one-year extension. We have also been appointed to the reablement services and homecare services frameworks by the London Borough of Camden, for a two-year period with a further potential two-year extension.



On 15 January 2014, we completed the acquisition of Complete Care, which provides high acuity care at home to around 150 individuals with on-going complex clinical healthcare needs. An acquisition in the complex care arena was a key part of our strategy to develop our healthcare business, and Complete Care will complement MiHomecare's existing domiciliary care operations in England and Wales.



Complete Care generated revenue and EBITA of £17.9 million and £1.1 million respectively in the year ended 31 March 2013. Integration costs are estimated to be in the region of £1.3 million. The business employs around 650 personal care assistants, including registered nurses.



We are confident as we reach the end of the integration of MiHomecare, together with the acquisition of Complete Care which further strengthens our proposition in the healthcare market, that significant growth opportunities exist in this division.



Non-core activities: Mechanical and electrical engineering contracting

The exit from our cyclical mechanical and electrical engineering contracting businesses continues, although is taking slightly longer than anticipated. As a result, we now anticipate that losses in the second half of the year will be around £3-5m higher than those reported in the first half of the year.



Pensions

Mitie is currently in consultation with members of its main defined benefit pension scheme regarding a proposed change to their future pension entitlement. Under the proposed change, the pension scheme will remain open to future accrual but with a generally reduced level of future benefit increases. The deficit on the scheme at 30 September 2013 was £27.1m under IAS 19 (revised).



Should the proposed change be implemented following the consultation, it is expected to reduce the scheme's future liabilities and therefore reduce the deficit on the scheme, as well as mitigate a potential rise in future contributions. Any such reduction in scheme liabilities would result in a one-off credit to the income statement in the current year under IAS 19 (revised).



Financial position

Our balance sheet remains strong and enables us to invest in organic growth and take advantage of value creating opportunities as they arise.



Outlook

The financial year is progressing well. We continue to re-position the group away from low growth, low margin activities and we remain very positive about the range of outsourcing opportunities across our key markets. Mitie is well positioned to deliver good organic growth, particularly in facilities management and healthcare, and maintain strong margins. We are confident that we will continue to build on our long track record of sustainable profitable growth.



-Ends-







Future reporting dates

Mitie will announce its full year results on Monday 19 May 2014.



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

Bounced off 50DMA flirting with 25DMA.

Mitie Group plc ("Mitie"), the strategic outsourcing company, announces a pre-close trading update before entering a close period on 1 April 2014. Preliminary results for the financial year ending 31 March 2014 will be announced on 19 May 2014.

Overview
Since the announcement of the group's Interim Management Statement (IMS) on 3 February 2014, Mitie has continued to perform strongly, particularly in Facilities Management (FM), and expects to deliver underlying full-year results that are in line with market expectations.

We continue to successfully re-position the group to focus on higher growth and higher margin sectors.We are focused on driving our core UK FM business to its full organic growth potential and being the number one provider in our chosen markets. At the same time, we will invest and grow in adjacent markets - healthcare is a particular focus and we aim to take the leading position in the homecare market. The strength of our business in both of these areas will enable us to further build on our track record of sustainable, profitable growth.

http://www.moneyam.com/action/news/showArticle?id=4776023

Long (SB) @ 329.0 19/05 Preliminary statement of Annual results.

Mitie Group plc

Preliminary announcement of results for the year ended 31 March 2014

Excellent progress through a focus on key growth markets




2014 Headline1

Headline

yoy % change2

2014 Statutory

Statutory

yoy % change


Revenue

£2,142.6m

+8.2

£2,221.1m

+4.7


Operating profit

£127.5m

+6.0

£82.6m

+21.5


Profit before tax

£113.3m

+4.3

£68.4m

+21.5


Operating profit margin

6.0%

(0.1ppt)

3.7%

+0.5ppt


Basic earnings per share

24.3p

+5.2

13.4p

+13.6


Dividend per share

11.0p

+6.8

11.0p

+6.8


Strong financial performance

· Total headline revenue growth of 8.2%, of which 5.2% was organic

· Headline operating profit up 6.0% to £127.5m (2013: £120.32m)

· Excellent conversion of EBITDA to cash of 107.3% (2013: 127.8%2 reported), well above stated long-term KPI of 80% (headline 102.4%; 2013: 110.0%2)

· Net debt at 31 March 2014 of £186.6m or 1.6x statutory EBITDA (2013: £192.2m or 1.9x statutory EBITDA)

· Total dividend for the year up 6.8% to 11.0 pence per share (2013: 10.3 pence per share)

Core facilities management business driving strong organic growth

· Sector-leading organic growth in facilities management of 7.2%

· Successfully retained a number of our most significant contracts, including with Network Rail (£75m over five years) and Capita (£110m over five years)

· Awarded a landmark contract with the Home Office, valued at £180 million over eight years, with responsibility for over 900 detainees at the Colnbrook and Harmondsworth Immigration Removal Centres near Heathrow

· Awarded a range of new integrated or bundled FM contracts valued in excess of £10m per annum, including with the Bank of Ireland, Mitchells & Butlers, Four Seasons Healthcare, an insurance company and a major online retailer

· Property Management business successfully mobilised our contract with London Borough of Hammersmith and Fulham (£200m over ten years) and awarded a new contract with Royal Borough of Kingston (£15m over two years)

Entry into the healthcare market progressing well

· Integration of MiHomecare is complete and we continue to see substantial long-term opportunities to grow in the homecare care subset of the healthcare market

· Acquired Complete Group in January 2014 for £9m, adding complex care capabilities to our homecare proposition

Further de-risking the business

· Restructured the defined benefits pension scheme, resulting in a one-off, exceptional net credit to the income statement under IAS 19 (revised) of £10.2m and reduces future increases in pension contributions

· We are close to completing the exit from our mechanical and electrical engineering construction business - exceptional losses of £13.6m in the year (2013: £25.2m including business closure costs)

· We are also reducing our exposure to the design and build element of our former Asset Management business - one-off, exceptional charges of £25.4m in the year (2013: £nil)

Well positioned for further growth

· Robust balance sheet and strong financial position will support growth

· 84% of 2014/15 budgeted revenue secured (prior year: 85%)

· Sales pipeline buoyant at £8.2bn (2013: £8.7bn) and order book remains strong at £8.7bn (2013: £9.2bn)

Ruby McGregor-Smith CBE, Chief Executive of Mitie Group plc, commented:

"We have made excellent progress, achieving sector-leading organic growth driven by new and expanded contracts, as well as completing a bolt-on acquisition in healthcare. We are very well-positioned as one of the UK's leading integrated facilities management providers and we have also invested in higher margin markets which will support our growth aspirations.

"We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access bundled and integrated services. We are confident that we will continue to build on our track record of delivering sustainable, profitable growth."







1 Headline results exclude other items. Other items comprised: exceptional charges in relation to design and build contracts in Energy Solutions of £25.4m (2013: £nil); a net credit arising from the restructure of the Mitie Group defined benefit pension scheme of £10.2m (2013: £nil); acquisition and integration costs of £5.1m (2013: £6.9m); the amortisation of acquisition-related intangible assets of £11.0m (2013: £10.0m); and restructuring costs of £nil (2013: £10.2m). Other items also include the results of the engineering construction business being exited, which had revenue of £78.5m (2013: £139.9m), a trading loss of £13.6m (2013: £3.1m) and business closure costs of £nil (2013: £22.1m).



2 The 2013 results have been restated following amendments to IAS 19 'Employee Benefits'.





For further information please contact:

Erica Lockhart, Head of Corporate Affairs
T: +44 (0) 20 3123 8179 M: +44 (0) 7979 784488

John Telling, Group Corporate Affairs Director
T: +44 (0) 20 3123 8673 M: +44 (0) 7979 701006



Mitie will be presenting its preliminary results for the year ended 31 March 2014 at 10.00 on Monday 19 May 2014. A live webcast of the presentation will be available online at www.mitie.com/investors at 10.00. The recorded webcast of the presentation and a copy of the accompanying slides will also be available on our website later in the day. Mitie expects to publish its Annual Report and Accounts (containing financial statements that comply with IFRS) in June 2014 and copies will be available from Mitie's registered office and on its website www.mitie.com. Mitie's Annual General Meeting will take place at 14.30 on 9 July 2014.



Legal disclaimer

This announcement contains forward-looking statements. Such statements do not relate strictly to historical facts and can be identified by the use of words such as 'anticipate', 'expect', 'intend', 'will', 'project', 'plan', and 'believe' and other words of similar meaning in connection with any discussion of future events. These statements are made by the Directors of Mitie in good faith based on the information available to them as at 19 May 2014 and will not be updated during the year. These statements, by their nature, involve risk and uncertainty because they relate to, and depend upon, events that may or may not occur in the future. Actual events may differ materially from those expressed or implied in this document and accordingly all such statements should be treated with caution. Nothing in this document should be construed as a profit forecast.

Except as required by law, Mitie is under no obligation to update or keep current the forward-looking statements contained in this report or to correct any inaccuracies which may become apparent in such forward-looking statements.



High resolution images are available for the media to download free of charge from www.flickr.com/Mitie_group_plc





Overview

Mitie has had another very good year, delivering strong organic growth and implementing further change to accelerate growth in the longer term.

Our core facilities management (FM) business performed exceptionally well, with a steady flow of contract awards and retentions across both the private and public sectors. We are beginning to see an uplift in the level of bid activity across our businesses and we have a robust sales pipeline. We also see a significant opportunity to expand our business with our existing client base, by proactively selling the benefits of bundling more services and of integrated FM. Our energy consulting capability remains an important niche area for us and differentiates our integrated FM proposition in the marketplace.

Our entry into the healthcare market has continued with success, with MiHomecare performing well and the acquisition of Complete Group during the year providing us with more complex care capabilities. We have built a strong proposition in the healthcare market and see significant long-term growth opportunities in this area.

Our strategy is to focus on markets where we see potential for growth and which meet our margin targets. In this financial year, we expect to complete our exit from our loss-making mechanical and electrical engineering construction business, which is exposed to the construction markets. We are also moving out of the design and build element of asset management. Whilst we have incurred significant losses in doing so, the group is now better positioned to deliver our growth ambitions.

As ever, our achievements during the year would not be possible without the exceptional efforts of our people and we would like to extend a huge thank you to each of them, and welcome those who joined us.

Results

During the year, headline revenue grew by 8.2% to £2,142.6m (2013: £1,980.6m). Headline operating profit increased by 6.0% to £127.5m (2013: £120.3m), reflecting a margin of 6.0% (2013: 6.1%). Headline profit before tax increased by 4.3% to £113.3m (2013: £108.6m) and headline earnings per share increased by 5.2% to 24.3p (2013: 23.1p).

Our statutory results include £44.9m of other items (2013: £52.3m), of which £33.9m are non-recurring (2013: £42.3m) and will not form part of our income streams in the future. The key non-recurring items are: £13.6m of trading losses incurred as part of our exit from our mechanical and electrical engineering construction business; exceptional charges of £25.4m in respect of reducing our exposure to the design and build element of our Asset Management business; costs resulting from acquisitions and the related integration costs of £5.1m; and a £10.2m accounting net credit resulting from a change to future pension obligations under the Mitie Group defined benefit pension scheme.

Cash generation remained strong, with cash inflows from operations of £124.1m (2013: £131.0m), representing excellent conversion of EBITDA to cash of 107.3% (2013: 127.8%). The balance sheet remains robust with net debt at the year end of £186.6m or 1.6x EBITDA (2013: £192.2m or 1.9x). Return on capital employed has increased to 16.9% (2013: 16.5%).

We have committed bank facilities of £250m until September 2015 along with £252m equivalent of US Private Placement debt. Both of these facilities leave us in a strong position to take advantage of value-creating acquisition opportunities as they arise.

During this period, our order book has decreased by £0.5bn to £8.7bn (2013: £9.2bn). Our sales pipeline currently stands at £8.2bn (2013: £8.7bn) and our forward revenue visibility is excellent, with contracted revenue for the year ending 31 March 2015 at 84% of budgeted revenue (prior year: 85%).

Dividend

The Board's policy is to grow the dividend broadly in line with the underlying earnings of the group. The final dividend proposed by the Board has increased by 7.0% to 6.1p per share (2013: 5.7p per share), bringing the full year dividend to 11.0p per share (2013: 10.3p per share), an increase of 6.8%. Subject to shareholder approval at the Annual General Meeting, the dividend will be paid on 6 August 2014 to shareholders on the register at 27 June 2014.

Board and corporate governance

Corporate governance remains an important and committed area of focus for the Board. The priorities during the year were the continued execution of our growth strategy, the ongoing review of performance and risk and the composition of the Board.

On 1 June 2013, Jack Boyer was appointed as a Non-Executive Director of the Board. He has extensive experience of building and growing businesses globally and his early career was spent in consultancy and banking. On 31 October 2013, Terry Morgan CBE retired as a Non-Executive Director of the Board and Chairman of the Remuneration Committee. We thank him for his contribution and wish him well for the future. On 1 November 2013, Crawford Gillies undertook the role and responsibilities of Chairman of the Remuneration Committee.

Bill Robson, our longest serving Executive Director, has indicated his intent to step down from the Board on 31 July 2014. Bill has served as a member of the Board since August 2001 and we are delighted that he intends to remain as part of the executive team. He will continue as Managing Director of our Property Management division, focusing on the many new opportunities that are developing within the housing sector.

Outlook

Our focus remains on driving our core UK FM business to its full potential in order to generate strong organic growth and maintain our margins at or above their current levels. At the same time, we will continue to grow and invest in adjacent markets - healthcare is a particular focus and we are well-placed to benefit from the substantial growth opportunities this market will offer.

We have made significant progress re-positioning the group away from low growth, low margin and higher risk activities by exiting businesses which do not meet our financial criteria. As a result, we are better placed than for many years to deliver growth in our chosen outsourcing markets.

The group is financially robust and we have a clear, focused strategy for growth. We are excited about the growth opportunities ahead and confident of delivering shareholder value.





Strategy overview

Our strategy is to deliver sustainable, profitable growth, and we will achieve this through two key routes.

We are focused on driving our core UK FM business to its full potential. Our ambition is to be the leading FM provider in the UK, with specific strengths in our target sectors. We will continue to focus on clients in both the public and private sectors, and provide them with world-class services, unrivalled expertise and the best value for money.

Our growth in FM will come in part from developing relationships with new clients, but more so through expanding our relationships with existing clients. The evolution that our clients make from single service delivery, to bundles of services, to integrated FM in some cases, has been a significant driver of our growth and we see substantial further opportunities to grow with our clients in this way. To this end, we are investing heavily in our key account management capabilities and are taking a more sector-focused approach to both sales and operations. In doing this we aim to grow our overall market share.

At the same time, we will continue to grow and invest in adjacent markets. Healthcare is a particular focus and we aim to take the leading position in our chosen sectors of the homecare market. The integration of MiHomecare is complete and with the acquisition of Complete Group during the year, we are well-placed to exploit great opportunities in this fast-growing market.

This strategy will enable us to achieve a set of key business goals over the next five years:

· As part of our objective of being the UK market leader in FM and in order to better support our clients, we are focusing our business on market sector specialisms.

· We will further build on our success in the Care and Custody sector, growing our services to Central Government, particularly in the area of immigration and prisons.

· In the homecare market, we will develop a leadership position and realise the sales synergies created by adding more complex care into our offering.

Across everything we do, we will be the trusted advisor for our clients, building and growing strong relationships based on sector-leading expertise and propositions, strategic advice, innovative technology and management information.

All of this will ensure that we are a scale player with a strong competitive position in each of our major markets, we generate margins that are above the industry average and we have excellent visibility of long-term revenues.

Reducing risk in our business

We are concentrating on higher margin activities in growth markets that feature long-term, secured revenue streams.

Our mechanical and electrical engineering construction business, where we played a role as subcontractor on major installation projects, carried an unacceptable degree of risk. In addition, as it operated in a cyclical, low margin sector, it could no longer meet our financial or strategic targets. Consequently, we are now well on the way to exiting this business and expect this process to be completed during the financial year ending March 2015.

For similar reasons, we have also been actively reducing our exposure to the design and build element of our Asset Management business, which has become part of the Energy Solutions division. We have existing commitments on a small number of legacy projects where we are carrying design and build risk and continue to experience delays and considerable cost overruns. As a result, during the financial year we recognised a number of non-recurring, exceptional losses in relation to some of these contracts. We have assessed the carrying value of any assets in our accounts and our contract related provisions are £25.4m as at the year end. This is significantly higher than we previously estimated, predominantly due to overruns on one of our generation projects, where we have provided against delays to completion and applied a more conservative assessment of the through life value of the contract. Going forward, design and build risk remains on a small number of material energy contracts and their financial returns remain uncertain. We continue to closely monitor their operational and financial performance.



Marketplace overview

Clients continue to recognise the strengths of outsourcing in the drive to meet cost and operational challenges. We are excited about the growth opportunities in our targeted markets, as clients move from outsourcing single services to relying on our support across bundled services and, ultimately, fully integrated FM.

Although the UK economy is showing signs of improvement, and we have seen an increase in our bid activity across our businesses in the past 12 months, there is still some distance to go before we can say that the effects of the downturn are definitely behind us.

Against this backdrop and the austerity measures which continue to be implemented by both central government and local authorities, outsourcing is now well-established as a route to improved services with lower costs.

We work with people who want to perform better, and see attractive opportunities across FM and Healthcare.

Facilities Management

The total UK FM market is valued at £125 billion, with £75 billion currently outsourced. Our principal addressable market, defined as contracts worth over £500,000 per year, is estimated to be £45 billion, of which we have a 4% share. The market remains fragmented and is dominated by around 120 large providers, with the 12 largest players accounting for 34% of the market. Individual service line markets tend to be led by different competitors, who in turn have follower positions in other markets. The FM market is expected to grow around 2% per year between 2013 and 2017, a significant improvement on the 1.2% per annum achieved between 2007 and 2013 (sources: leading management consultancy; MTW Research).



During 2013, we commissioned an independent qualitative research programme among senior property and facilities directors in the UK. Clients want companies such as Mitie to help them carry out their business better, not just cheaper. Among the survey's key findings was the fact that although outsourcing remains a key method of reducing costs, it is also recognised as a way to harness expertise. Many interviewees also agreed that a focus on least cost provision was a false economy, and stressed the need for a more outcome-based approach that encourages the best performance from the service provider.

The research identified five key customer needs: an emphasis on low price coupled with a proven track record; a steady shift towards bundled services and integrated FM; increased expectation of FM providers, with a need for strategic advice as well as efficient service delivery; greater demand for technology and management information; and reduced demand for FM on a global or cross-border basis.

Public sector

In the public sector, we believe that outsourcing will remain a key government strategy and we foresee an increase in activity, driven by continuing budget reductions. The CBI recently estimated that the Government is only half way through its planned deficit reduction. In order to further reduce the deficit and procure services that offer the best value for money, it will continue to open up public services to independent competition. This will be supported by the UK public services industry, which makes up more than seven per cent of the UK's GDP and supports over five million jobs. The CBI also proposed to introduce new measures to boost transparency and trust in public sector contracts that are managed by private and third sector organisations, which we endorse.

Although we will be highly selective in the opportunities we pursue, justice, social housing and local authorities are all areas where we anticipate high levels of growth in the coming years. While there have been procurement delays in the justice market, we remain confident and have also identified attractive opportunities in social housing, particularly through the long-term nature of contracts and relationships that are a feature of this market.

Private sector

Private sector clients face many similar challenges to their public sector counterparts. They aim to outsource non-core services in order to reduce costs while maintaining - and in many cases improving - the services they offer. We have proven strengths in many segments and expect good growth, especially in retail, manufacturing, transport and the financial sector. Our growth has been predominantly driven by the private sector over the past five years, and we expect this trend to continue, as the economic recovery gains momentum.

Healthcare

Out of an annual UK healthcare spend of over £100 billion, our target social care market accounts for £17 billion and the homecare market in England alone currently accounts for around £8 billion. However, a number of trends will drive this amount up in the coming years.

The UK population is ageing - with the number of over 85s expected to double in the next 25 years. This increase means that long-term care is expected to account for an increasing proportion of GDP. According to the OBR, this figure could rise from around 1.5% today to 2.5% by 2060. Cost pressures continue to mount, with local authorities expected to reduce spending by £800 million in the near term. The planned 10% reduction in council spending over the next two years, announced in the 2013 summer spending review, will add further momentum to the drive to achieve better value in all aspects of long-term care.

Homecare is recognised as an important element in the move towards a system of care that both meets patient needs and also delivers better value. People prefer to remain in their own homes when possible, while central government and local authorities view homecare as a more cost-efficient alternative to care in hospitals or retirement homes. Consequently, homecare in the UK is a marketplace that displays many of the same features as the early days of FM outsourcing. These include clear opportunities for consolidation in a fragmented market and for technology to play a major role in accelerating performance. Furthermore, there is the potential for us to build on our existing FM relationships with local authorities and the NHS to secure homecare contracts.

Increasingly, homecare (or adult social care) is publicly funded but privately delivered. Two decades ago, the vast majority of care was provided by local authorities. Today, such provision is negligible and almost all care is delivered by independent organisations such as Mitie.



Operational performance

There are significant opportunities for us to grow organically and to win market share. This growth will be driven by: our extensive self-delivery capability supported by a well-managed supply chain, which generates value for our clients whether they choose single, bundled or integrated services; our focus on technology which can increase efficiency and enhance profit margins; and our commitment to investing in capable management teams that can build and maintain key strategic relationships.

We have aligned the way we report our FM business to more accurately reflect how the business is managed, which is in the two key areas of Soft and Hard FM. Soft FM is made up of: cleaning and environmental services; security; catering and front of house services. Hard FM provides a range of technical and building services.

Our integrated FM proposition brings together a range of hard and soft FM services. During the year, the total revenue generated from our integrated contracts was £668m.

Over the last two decades, the FM industry has moved from providing single services to bundles of services. Today, the focus is on integrating a wide range of services into one cohesive contract, often at multiple and diverse sites. However, although the immediate benefits of bundled and integrated services include lower costs and a single point of accountability, long-term success is built on a track record of consistent delivery across all service lines.

Many FM clients see technology - and specifically management information - as a key differentiator among providers. The data that we collect and hold as part of managing a client's estate can provide powerful management information. It allows us to reduce the total cost of occupancy and improve service levels and responsiveness. It also provides insight for strategic decisions about how our clients run their estates; for example, how to better use mobile working or how to invest (or divest) across their portfolio.

While a fully integrated FM model will not suit all clients, the shift to greater integration and bundling of services is steady and is continuing to generate new and expanded contracts for Mitie.

Soft FM




2014

2013

Growth


Revenue

£1,190.8m

£1,122.2m

6.1%


Operating profit

£74.8m

£73.4m

1.9%


Operating profit margin

6.3%

6.5%

(0.2ppts)


Order book

£5.1bn

£5.0bn

2.0%


Cleaning and environmental services

Launched in 2013 under the Environmental+ brand, this business is one of the UK's largest providers of cleaning, pest control, landscaping, waste recycling and winter gritting. It employs over 32,000 people and is active on every high street in the country.

We brought these services together under one banner to reflect client demands for linking services that complement each other, saving costs and improving quality.

This model allows us to equip our people with multiple skills, thereby reducing the number of site visits and improving productivity. This joined-up approach also increases efficiencies, saves vital resources such as energy and water, and helps to reduce our clients' carbon footprints.

Security

Our focus is on providing our clients with total security management. We have responded to changes in the industry by adopting a risk-based approach to security - we assess risks and then bring together the right people, technology and consultancy services to manage them.

While manned guarding remains central to our security services, we have diversified through a range of higher margin and predominantly technology-based offerings. Services such as remote monitoring, employee screening, lone worker protection and vacant property security systems are changing our business mix.

In addition, there are good opportunities for us to incorporate security within integrated FM contracts.

Catering and front of house

This is a service line that is now delivering in a market where we have huge potential to grow - the UK contract catering market alone is worth £4.2 billion. Our Gather & Gather catering brand has increased its bottom line three-fold in only three years and is winning business in its own right, as well as an integral part of broader FM contracts.

Competition in this market is significant but fragmented - split between the large global corporates and a host of smaller, independent and owner-operated businesses. The market is based on specialisation, with defined brands and offerings targeted at specific sectors. Our team is diverse and contemporary, and offers clients a new, challenger brand with a real point of difference.

These services have huge potential to generate reputational goodwill and position Mitie as the premier provider of catering and reception services, in combination with our award winning Client Services.

Hard FM




2014

2013

Growth


Revenue

£579.4m

£526.7m

10.0%


Operating profit

£30.0m

£29.0m

3.4%


Operating profit margin

5.2%

5.5%

(0.3ppts)


Order book

£2.1bn

£2.8bn

(25.0%)


Our technical and building services offering encompasses a full range of hard FM services, from mechanical and electrical maintenance to lighting and building fabric repairs. We operate in a wide range of sectors and are currently seeing good opportunities across the business; particularly with clients in the transport, local government, retail and commercial sectors.

Demand for our mobile maintenance service continues to grow, and it is now the most comprehensive in the UK. We are also the largest lighting contractor in the UK, and the advances in LED lighting technology have enabled us to differentiate ourselves further by providing energy efficiencies.

Our specialist services continue to provide new opportunities, through services such as water treatment, building controls, fire and security systems and compliance; all of which continue to grow. Our smartphone operational solution and performance audit software is revolutionising the way our engineers operate, and the way our clients manage their technical assets.

To further support our clients, we have refined our operational structure. Our technical and building services offering now encompasses a range of niche property services such as roofing and plumbing, which previously sat within Property Management. As all of these services are related to either long-term maintenance contracts or short-term projects for clients with large, commercial property portfolios, there are significant benefits from operating them as part of a singular, broader business.



Energy Solutions




2014

2013

Growth


Revenue

£15.9m

£45.9m

(65.4%)


Operating profit

(£4.4m)

(£1.4m)

(214.3%)


Operating profit margin

(27.7%)

(3.1%)

(24.6ppts)


Order book

£0.2bn

£0.3bn

(33.3%)


Energy and carbon consumption are playing a growing role in the property management decisions and strategies of our clients. Costs continue to be a major issue for all, with our own research forecasting that they will double by 2020. The issue is further clouded for clients by the confusing landscape of obligations and policies, as well as the complex solutions offered by many providers.

Our FM proposition is supported by services from our Utilyx business, which help our larger FM clients to procure, use and generate electricity more efficiently. Energy consulting is an important differentiator for many of our clients, who recognise that it can add significant value to their relationships with Mitie. Utilyx also works direct with a large independent client base.

During the year, we integrated our Asset Management business into Utilyx. We are continuing to reduce our exposure to the design and build element of this business.

Property Management




2014

2013

Growth


Revenue

£264.8m

£242.8m

9.1%


Operating profit

£14.4m

£13.6m

5.9%


Operating profit margin

5.4%

5.6%

(0.2ppts)


Order book

£0.8bn

£0.9bn

(11.1%)


Property Management now operates solely in the domestic housing market, serving both private and public sector customers. We deliver a wide range of property related services, and are a market leader in comprehensive repair and paint services. These operations are delivered locally through our branch network in 28 locations, and reach in excess of 200,000 homes across the UK.

The market is fast moving, and we continue to innovate and expand the range of services we offer. We support our clients to make transformational change, which includes bespoke partnering models, legal structures, strategic planning, investment consultation and stock surveys.

The market is also continuing to consolidate and during 2013 we saw an increasing trend towards longer-term, larger bundled contracts across larger social housing portfolios. With continued pressure on local authority budgets, many authorities are turning to economies of scale to maintain quality across housing stocks. We are well placed to exploit this trend by bundling services together for clients.

Our repairs business, which provides services to insurance companies' customers, and private sector housing offering continues to grow and we are creating a sector specialism within our chosen markets.

Healthcare




2014

2013*

Growth


Revenue

£91.7m

£43.0m

113.3%


Operating profit

£12.7m

£5.7m

122.8%


Operating profit margin

13.8%

13.3%

0.5ppts


Order book

£0.5bn

£0.2bn

150.0%


* Enara was acquired on 9 October 2012, these results are from the period from acquisition to 31 March 2013

Since the acquisition of Enara in 2012, which marked our entry into the homecare market, we have rebranded the business as MiHomecare. It now benefits from a more streamlined corporate structure and back office, and full integration into our operations is on track.

MiHomecare provides high quality care at home to people who require help due to illness, disability or infirmity. We deliver around 120,000 hours of care per week to 10,000 people via some 6,000 employees working out of over 57 branches. We offer a range of homecare models to a client base of local authorities (78% of revenue), the NHS (5%) and private individuals (17%). The average length of contract is three years and the business has a retender success rate of over 90%.

During 2013, we were appointed to deliver a Continuing Healthcare programme in Leicestershire as well as framework contracts in Peterborough, Worcestershire and Richmond upon Thames. We also won a two-year contract to provide reablement services and homecare in the London Borough of Camden.

Long-term, our strategy is to complement MiHomecare's domiciliary care operations with capabilities in reablement, complex care, community services and integrated care pathways. The acquisition of Complete Group in January 2014 was an important step in this direction. Complete Group employs some 650 people, including registered nurses, to provide high acuity care at home to around 150 individuals with ongoing complex clinical healthcare needs.





New and retained contract summary

We have continued to build on the excellent client relationships we have in our key markets. This summary shows a selection of contracts that we have retained, expanded and been awarded during the year.


Client

Contract

Timeframe

Total value



0BFinance and professional services








Capita

Retained and expanded a contract to deliver integrated FM

5 years

£110m


PwC

Retained a contract to provide document management and distribution services

3 years

ND


Bank of Ireland

Awarded a significant new contract to deliver facilities management at 350 sites across the Republic of Ireland, Northern Ireland and Great Britain

5 years

ND


Law firm

Retained and expanded a contract to provide a range of business services, including mailroom, printing and other services

5 years

£12m


Law firm

Awarded a new contract to provide business services

3 years

£5m


Stock exchange

Added to our existing work delivering facilities management, with a contract including cleaning, mail, porterage, reception, reprographics, switchboard and waste management

3 years

£4m


Arup

Awarded a new contract for total security management

3 years

ND


1BRetail











Major online retailer

Awarded a new contract to deliver a range of facilities management services

3 years

£47m


Mitchells & Butlers

Awarded a new contract to provide waste management services at 1,600 restaurants throughout the UK

3 years

£38m


Tesco

Awarded a contract to deliver lighting

4 years

ND


Cineworld

Awarded a contract to provide cleaning services at 44 cinemas in the South of England, as well as Cineworld's head office in London

3 years

£9m


Major UK luxury fashion retailer

Gather & Gather awarded a new contract to provide catering services

3 years

£5m


A British shoe manufacturer

A new contract, subject to final negotiations providing bundled FM

3 years

£4m


2BManufacturing and utilities








AWE, the Atomic Weapons Establishment

Retained and expanded our partnership to deliver bundled services

5 years

£50m


Novartis Pharmaceuticals

Retained and expanded a contract for waste management services

5 years

£35m


Luxury car maker

Retained and expanded our contract to deliver a range of cleaning and environmental services

5 years

£25m


Bergen engines

Awarded a new contract to provide facilities management services in Norway

3 years

£8m


BAE Systems

Awarded a new contract for total security management, working within its Real Estate Solutions business

3 years

ND


Springfields Fuels

Awarded a new contract for total security management

7 years

£6m


Kellogg's

Awarded a new contract to provide facilities management services to Kellogg's UK and European head offices in Manchester and Dublin, as well as specialist hygiene services to their manufacturing plant in Wrexham

3 years

£5m


National Grid

A new total security management contract

6 years

£4m


4BTransport and logistics











Network Rail

Retained a contract to deliver integrated FM

5 years

£75m


Heathrow Terminals 3, 4, 5 and the Heathrow Express

Awarded a new contract to provide technical FM

3 years +2 years

£15m (phase 1)


Eurotunnel

Retained and expanded a total security management contract

3 years

£12m


HS1

Awarded a contract to operate Ashford International station on behalf of HS1 Ltd, owner of the UK's first high-speed railway

5 years

ND


FedEx

Renewed a contract to provide security services

3 years

£3m


5BHealth











Four Seasons Healthcare

Commenced a new contract in January to deliver technical FM across its estate of care homes

3 years

£33m


Epsom and St Helier University Hospitals NHS Trust

Awarded a new contract to provide domestic cleaning, portering and catering

5 years

£35m


NHS Foundation Trust

Awarded a technical facilities management contract to deliver a lighting project

6 months

£4m


6BCentral government











The Home Office

Awarded a new contract to manage and maintain two immigration centres

8 years+

3 years

£180m

(phase 1)


The Maritime & Coastguard Agency

A new bundled FM contract

3 years

£4m


7BLocal government











London Borough of Sutton

A new contract delivering technical FM

7 years +

3 years

£15m

(phase 1)


8BEducation










University of Law

Awarded a multi-service contract to include cleaning, security, mechanical and electrical engineering, and pest control services across the University of Law's eight campuses

3 years

ND


Oxford Brookes University

A new cleaning contract

3 years

£1m


9BHomecare










East Sussex County Council

Appointed to provide homecare, reablement and continuing healthcare

5 years

£20m


Worcestershire and Richmond upon Thames

Appointed to framework contracts

5 years

£3.3m


Leicestershire

Appointed to deliver a Continuing Healthcare programme

5 years

£2.5m


Nottinghamshire County Council

Home based care and support services

3 years

£2.5m


London Borough of Bexley

Appointed to deliver reablement care

2 years

£1m


10BSocial housing










Orbit Heart of England

Secured an additional £2.5m pa contract to deliver capital improvement works over eight years. This is in addition to our existing work with the client and brings the total contract value to £152m over eight years

8 years

£20m


Royal Borough of Kingston

Awarded a new contract to manage Kingston's 'Better Homes' programme, including delivering planned work and decorations to properties across the borough

1 year +

1 year

£15m


London & Quadrant Housing Trust

Awarded a new contract to deliver painting services to L&Q's housing stock throughout South East England

6 years +

6 years

£7.5m to £15m


Raglan Housing

Awarded a new contract to deliver painting services to 5,000 properties across Southern England

6 years

£4.5m


ND = Not disclosed









Financial review

Financial highlights

We are focused on delivering long term value for our shareholders. With this objective in mind, we are repositioning our business to focus on markets that demonstrate good organic growth potential, can generate strong margins and have a lower risk profile.

This year's financial results demonstrate the strength of our Facilities Management (FM) and Property Management businesses, which continue to generate strong organic growth, and a high margin contribution from our Healthcare business. Separately, we have also recognised the impact of a number of other exceptional items, including losses resulting from our decision to reduce our exposure to two select areas of our business that no longer meet our growth, risk or return expectations and an accounting credit derived from our actions to de-risk our defined benefit pension exposure.

We delivered strong financial results in the year ended 31 March 2014, whilst also making good progress in repositioning our business. Headline revenue grew by 8.2% to £2,142.6m, headline operating profit grew by 6.0% to £127.5m and headline EPS increased by 5.2% to 24.3p per share, all of which underpinned the recommendation of a final dividend of 11.0p per share, an increase of 6.8% over the prior year.

Our results are supported by a strong balance sheet and impressive cash conversion - qualities that have been consistent features of our results and our management processes.

Statutory and non-statutory measures of performance

Our financial statements contain all the information and disclosures required by the relevant accounting standards and regulatory obligations that apply to the group. We have elected to provide some further disclosures and performance measures in order to present our financial results in a way that best demonstrates the performance of our business.

The results described as 'headline' report the performance of the trading activity of our core Soft FM, Hard FM, Property Management, Energy Solutions and Healthcare businesses along with the central overhead required to manage the group. The 'headline' measure illustrates the performance of the underlying activities of the group, and is a non-statutory measure.

We have separately disclosed any restructuring and acquisition-related items together with the results of the engineering construction business which we are exiting. These items are described as 'other items' within the income statement and in related parts of this Annual Report and Accounts. The 'other items' measure of our results is a non-statutory measure. In the current year, 'other items' comprise:

· The results of the engineering construction business we are exiting

· Exceptional charges in respect of reducing our exposure to certain Energy Solutions contracts

· Acquisition related charges, including amortisation of acquisition related intangible assets

· An accounting credit resulting from a change to future pension obligations under the Mitie Group defined benefit pension scheme (recognised under IAS19).

The sum of the headline and other items columns are the statutory reported results of the business and reflect the full trading result of the group, reported in accordance with IFRS. This presentation is consistent with the way in which we manage and report on our business internally and is consistently applied to enhance the disclosure of our performance.

During the year, the group reported on the activities of four divisions: Facilities Management, Property Management, Energy Solutions and Healthcare. With effect from 1 April 2014 we have provided enhanced transparency of the activities of our previously defined Facilities Management division and now disclose and describe separately the results of our Soft FM and Hard FM divisions. In addition, we have refined our operational structure to further support our clients and to focus the activities of our Property Management division solely on the domestic housing market. The niche property services delivered to commercial clients, which were previously undertaken by Property Management, are now part of the Hard FM division.

Revenue

Headline revenue in the year grew by 8.2% to £2,142.6m (2013: £1,980.6m). This increase is attributable to strong organic growth of 5.2% (£105.5m), the full year impact of the prior year acquisitions of £50.7m, and £5.8m from the in-year acquisitions of UKCRBs and Complete Group.

The revenue attributed to the engineering construction business which we are exiting was £78.5m (2013: £139.9m). This revenue has fallen by 43.9% this year as we near completion on committed work.

Total statutory revenue was £2,221.1m, representing growth of 4.7% on the prior year (2013: £2,120.5m).

Operating profit

Headline operating profit increased by 6.0% to £127.5m (2013: £120.3m). This increase is attributable to organic growth of £2.0m or 1.6%, the full year impact of the prior year acquisitions of £4.8m, and £0.4m from the acquisitions made during the current financial year. The group's headline operating profit margin remains strong at 6.0% (2013: 6.1%).

Statutory operating profit for the group increased by 21.5% to £82.6m (2013: £68.0m), reflecting both the growth in the headline performance of the business and a reduction in other items year on year.

Other items

Other items included in the income statement of £44.9m are set out in Note 3. These other items have been incurred principally as a result of our decision to reposition the group away from the construction related mechanical and electrical engineering contracting business and reduce our exposure to design and build contracts in the Energy Solutions division.

During the year, total losses of £13.6m were incurred in the engineering construction business which is being exited. These losses principally arose on settlement of certain contracts final accounts as business activities cease, which resulted in costs in excess of those anticipated at the end of the prior year. Judgements have been taken on the value and completion timetable for the remaining contracts and on the valuation of contract assets and liabilities at the balance sheet date.

Charges totalling £25.4m were incurred in the year as we sought to reduce our exposure to the design and build element of our Asset Management business, which is now part of the Energy Solutions division. We have reviewed the carrying value of assets on the balance sheet related to the activities of this division and have made contract provisions for the costs to complete certain works.

Acquisition related integration costs incurred during the year in respect of the acquisitions of Enara, Complete Group and UKCRBs were £4.4m (2013: £3.7m) and were broadly in line with their respective acquisition businesses cases. Acquisition costs in the year were £0.7m (2013: £3.2m). The amortisation of acquisition related intangible assets was £11.0m (2013: £10.0m).

Following consultation with members and the restructuring of the future benefits to be offered to members under the group's main defined benefit pension scheme, a credit of £10.2m (£10.5m less costs of £0.3m) has been recognised in the income statement under IAS19 (revised) due to the resultant reduction in scheme liabilities in the Mitie Group defined benefit pension scheme.

Earnings per share

We are focused on growing EPS to support our dividend growth aspirations and as a driver to enhancing shareholder value. Headline basic earnings per share increased by 5.2% to 24.3p per share (2013: 23.1p) and statutory basic earnings per share increased by 13.6% to 13.4p (2013: 11.8p).

The EPS measure is driven by both the average number of shares in issue and the profitability of the group. During the year, the Board approved a share purchase policy to maintain share numbers at a broadly consistent level year on year with the aim of ensuring that the interests of shareholders are not diluted by the issue of shares that support the group's various share schemes, nor by the issue of shares as consideration for earn outs under the Mitie Model. During the year, the group bought back 2.9m shares (2013: nil) at a cost of £7.4m to offset the issue of 2.3m shares in respect of earn outs under the Mitie Model. These shares were subsequently cancelled. To offset shares issued under the various share schemes, and to hedge against shares to be issued in the future under these schemes, 5.8m shares (2013: nil) were bought to be held in Treasury at a total cost of £17.0m and shares to the value of £2.8m (2013: £6.6m) were also purchased and held by the group's Employee Benefit Trust. The group's total return of cash to shareholders through share purchase and buyback activity in the year totalled £27.2m (2013: £6.6m). The average number of shares in issue in the year was 359.9m (2013: 357.7m) following this activity.

Dividends

The group has a strong track record of dividend growth and it is the Board's policy to grow dividends broadly in line with the headline earnings of the group. Accordingly, this year's cash returns to shareholders fully reflect the strong underlying performance of the business and have not been discounted by the impact of non-recurring charges. The full year dividend has been established by the Board to reflect the growth in headline earnings at 11.0p per share (2013: 10.3p per share), an increase of 6.8% and reflecting a cover of 2.2x times headline earnings per share. The final dividend proposed by the Board has increased by 7.0% to 6.1p per share (2013: 5.7p per share). During the year, total dividends of £38.1m were paid to shareholders (2013: £34.9m).

Strong cash conversion and free cash flow

Our profits are strongly backed by cash flows. Cash conversion measures our success in converting operating profit (measured by EBITDA) to cash and reflects both the quality of our earnings and the effectiveness of our cash management activities. Cash inflows from operations decreased by 5.3% to £124.1m during the year (2013: £131.0m), but through our continued focus on working capital management we have delivered excellent conversion of profit (EBITDA) to cash at a rate of 107.3% (2013: 127.8%). On a headline basis our cash conversion is 102.4% (2013: 110.0%); this is after adjusting for the effects of certain charges recognised in other items that will not recur.

During the year, Mitie generated good free cash flow of £72.0m (2013: £87.7m), reflecting the strong cash generation of our business model which requires very low levels of capital expenditure to support its development (1.0% of group statutory revenue (2013: 1.3%)). This has enabled us to maintain very good dividend payments, return cash to shareholders, maintain constant share numbers to protect shareholder returns, and actively invest in organic and acquisitive growth opportunities. The consistency of our cash generation and our ability to provide strong cash returns to shareholders has been a key feature of our results and remains a major focus going forward.

Financing facilities

Mitie has a diverse range of secure funding facilities, with committed banking facilities of £250m which are available until September 2015 and on which the group has a floating LIBOR interest rate exposure. It also has a mix of US private placement loan notes, with a range of tenure which mature between 2017 and 2024 and an interest rate exposure that is predominantly fixed at around 4% per annum. The group also has further overdraft facilities of £40m.

Net debt and gearing

The gearing of the group has remained low and net debt at 31 March 2014 was £186.6m (2013: £192.2m), representing a reduction in our statutory net debt to EBITDA ratio to 1.6x (2013: 1.9x). This conservative gearing level gives us capacity to invest in value creating growth opportunities going forward and to provide strong cash returns to our shareholders.

Net finance costs

Total net finance costs increased by 21.4% to £14.2m (2013: £11.7m) in the year. This increase largely reflects the full year effect of the funding costs associated with the acquisition of Enara Group, which was made mid-way through the prior year. This acquisition was funded through the issue of US Private Placement loan notes with a fixed interest rate.

The total interest cost on US Private Placement loan notes was £9.5m (2013: £5.4m). Other interest and finance charges, net of investment revenue, were £3.3m (2013: £5.5m). The introduction of IAS 19 Revised in the current year has resulted in a new pension related interest charge in the year of £1.4m (2013: £0.8m).

Return on capital employed (ROCE)

It is our aim to enhance our ROCE over time. ROCE is calculated as headline operating profit after tax (adjusted for the proforma, full year effect of acquisitions) divided by capital employed. Capital employed is calculated as net assets excluding net debt less non-controlling interests. Our ROCE for the year was 16.9% (2013: 16.5%).

Our ROCE demonstrates our ability to generate returns from the capital employed by our business. We focus on our ROCE through the management of our asset base, consideration of returns on capital when we invest and through a focus on maximising the profitability of the group. By generating returns that exceed our weighted average cost of capital, currently around 8%, we are ensuring that we add value through our investment decisions.

Pensions

Our financial strength and balance sheet remain unaffected by any significant pensions deficit, with the net deficit of all the defined benefit pension arrangements included on the balance sheet being £19.1m (2013: £29.9m).

The deficit on the group defined benefit scheme at 31 March 2014 was £17.0m (2013: £29.7m). The significant decrease in the deficit was due to the strong performance of scheme assets and the positive impact of amendments made to the terms of the Mitie Group defined benefit pension scheme. Future increases in pensionable pay are now subject to a maximum annual cap equivalent to CPI. The scheme, which only has 240 contributing members and is closed to new entrants, will remain open to future accrual but with a generally reduced level of future benefit increases. This change reduced the scheme's future liabilities, mitigates a potential rise in future contributions and establishes a more affordable scheme going forward. The in-year financial impact of the capping of scheme benefits resulted in a non-cash, non-recurring credit to the income statement (after associated costs) of £10.2m.

The group also makes contributions to customers' defined benefit pension schemes under Admitted Body arrangements as well as to other arrangements in respect of certain employees who have transferred to the group under TUPE. Mitie's net defined benefit pension obligations in respect of schemes in which it is committed to funding amounted to £2.1m (2013: £0.2m).

Mitie contributes to a number of defined contribution pension schemes. Auto-enrolment became applicable for the group from 1 July 2013.

Investment in acquisitive growth

On 14 August 2013, Mitie acquired UK CRBs Ltd ("UKCRBs"), the criminal records checking service, for total consideration of £1.0m.

On 15 January 2014, Mitie acquired Complete Care Holdings Ltd ("Complete Group"), for total consideration of £9.0m.

From the date of ownership, the acquired businesses have contributed headline revenue of £5.8m and headline operating profit of £0.4m, which is in line with our expectations. Acquisition and integration costs of £0.7m and £0.4m respectively were incurred during the year in relation to these acquisitions. In addition, £4.0m of integration costs were incurred in relation to the prior year acquisition of Enara Group (now trading as MiHomecare).

Mitie's entrepreneurial investment model

In August 2013, Mitie purchased certain minority shareholdings of four Mitie subsidiary companies under their respective articles of association and shareholder agreements in accordance with arrangements under our entrepreneurial investment programme known as the Mitie Model. The total consideration for all four purchases amounted to £6.9m being satisfied by £0.8m in cash, and the remaining £6.1m by the issue of 2.3m new Ordinary shares of 2.5p each in Mitie Group plc valued at 267p per share, being the average of the closing middle market price for the five banking days immediately preceding 23 July 2013.

Added (Sept contract) @ 303.46

Trading Statement Monday.

Mitie Group makes positive start to year

StockMarketWire.com

Mitie Group said it has had a positive start to the year with good organic revenue growth driven by new and expanded contracts.

At 30 June 2014, 90% of budgeted revenues for this financial year had already been secured (30 June 2013: 89%), with phasing on a number of contracts expected to result in overall performance being weighted towards the second half of the financial year.

"The financial year has started well. We have a substantial order book as well as a strong pipeline of sales opportunities, giving us confidence that we will deliver good full-year organic revenue growth," the company said.

"We are positive about the range of outsourcing opportunities across our key markets and are confident that we will continue to build on our long track record of sustainable profitable growth."



Story provided by StockMarketWire.com

This has been disappointing so far to date, hovering on support levels. Sticking in though, half year financial results 17th November.

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Since hitting all time high end of Febuary not the most loved stock year to date. Chart doesn't look great. Broker forecasts are poor. Sitting on a paper loss from 329.0

Last chance saloon added on the spreads @ 293.91

Half yearly report Monday.

Mitie Group plc
Half-yearly financial report for the six months ended 30 September 2014
Strong performance in our core business
Financial highlights
2014 Headline1 Headline1 period on period %
change
2014 Statutory
£1,098.8m £5.9m £(1.3)m 0.5% (1.0)p 5.2p
Revenue £1,095.0m +4.8
Operating profit Profit/(loss) before tax Operating profit margin Basic earnings per share Dividend per share
 Headline revenue growth of 4.8%, of which 3.9% was organic
£64.2m +3.0 £57.0m +3.1 5.9% (0.1)ppt 12.4p +5.1 5.2p +6.1
 Headline operating profit up 3.0% (2.2% organic) and operating profit margin remains strong at 5.9%
 Headline cash conversion of 80.3%2 (2013: 106.7%) and statutory cash conversion of 128.6% (2013: 116.3%); above target KPI of 80%
 Net debt at 30 September 2014 of £233.8m or 1.5x headline EBITDA3 (2013: £221.8m, 1.5x headline EBITDA)
 Strong growth of both headline basic EPS and dividend, up 5.1% and 6.1% respectively
Strong organic growth in our Facilities Management business
 Sector leading organic FM revenue growth of 6.3% and contract retention rate above 90%
 Rated as the top overall service provider* in the UK FM industry for the second year running
 Successful in retaining our integrated FM contract with Vodafone for a further five years, valued at £250m
 Awarded a range of new FM contracts including with Royal Cornwall Hospitals valued at £90m over seven years and Heathrow Airport valued at £40m over three years
 Successfully mobilised our contract with the Home Office to run two immigration centres at Heathrow, in a contract valued at £180m over eight years
 Property Management division will have a more buoyant second half, supported by planned project works
 Challenging first half in our Healthcare division, however we remain confident of the long-term growth
prospects in this market
Exit from loss-making businesses complete this financial year
 The exit from our mechanical and electrical engineering construction business will be complete in this financial year; losses of £6.9m incurred in the period and we expect this to range between £11m and £15m for the full year (FY2014: £13.6m)
 We have assessed all remaining risk on the design and build contracts left in our Asset Management business; exceptional charges of £45.7m incurred (FY2014: £25.4m), which cover all balance sheet exposures and all material expected future costs
 Beyond these amounts, we expect no further exceptional charges from either of these businesses Well positioned for the long-term
 Order book remains healthy and now stands at £8.5bn (March 2014: £8.7bn); 98% of 2014/15 budgeted revenue secured (prior year: 99%) and 72% of 2015/16 forecast revenue secured (prior year: 74%)
 Bid pipeline has grown by 20% to £9.8bn (March 2014: £8.2bn) and continued investment being made in the bidding, strategic sales and operational management capability across the group
 Robust balance sheet and strong financial position will support growth Ruby McGregor-Smith CBE, Chief Executive of Mitie, commented:
“We have delivered a strong performance in our facilities management business during the first half of the year, and we expect to gain further positive momentum through the rest of the year.
“We have significantly de-risked our group by finalising the exit from our loss-making businesses. We are focused on investing in and maximising the long-term growth potential of our facilities management, property management and healthcare businesses.
“Our order book and sales pipeline are substantial. We are in a good position to deliver growth and look ahead with confidence.”

Mitie Group plc
Half-yearly financial report for the six months ended 30 September 2014
Strong performance in our core business
Financial highlights
2014 Headline1 Headline1 period on period %
change
2014 Statutory
£1,098.8m £5.9m £(1.3)m 0.5% (1.0)p 5.2p
Revenue £1,095.0m +4.8
Operating profit Profit/(loss) before tax Operating profit margin Basic earnings per share Dividend per share
 Headline revenue growth of 4.8%, of which 3.9% was organic
£64.2m +3.0 £57.0m +3.1 5.9% (0.1)ppt 12.4p +5.1 5.2p +6.1
 Headline operating profit up 3.0% (2.2% organic) and operating profit margin remains strong at 5.9%
 Headline cash conversion of 80.3%2 (2013: 106.7%) and statutory cash conversion of 128.6% (2013: 116.3%); above target KPI of 80%
 Net debt at 30 September 2014 of £233.8m or 1.5x headline EBITDA3 (2013: £221.8m, 1.5x headline EBITDA)
 Strong growth of both headline basic EPS and dividend, up 5.1% and 6.1% respectively
Strong organic growth in our Facilities Management business
 Sector leading organic FM revenue growth of 6.3% and contract retention rate above 90%
 Rated as the top overall service provider* in the UK FM industry for the second year running
 Successful in retaining our integrated FM contract with Vodafone for a further five years, valued at £250m
 Awarded a range of new FM contracts including with Royal Cornwall Hospitals valued at £90m over seven years and Heathrow Airport valued at £40m over three years
 Successfully mobilised our contract with the Home Office to run two immigration centres at Heathrow, in a contract valued at £180m over eight years
 Property Management division will have a more buoyant second half, supported by planned project works
 Challenging first half in our Healthcare division, however we remain confident of the long-term growth
prospects in this market
Exit from loss-making businesses complete this financial year
 The exit from our mechanical and electrical engineering construction business will be complete in this financial year; losses of £6.9m incurred in the period and we expect this to range between £11m and £15m for the full year (FY2014: £13.6m)
 We have assessed all remaining risk on the design and build contracts left in our Asset Management business; exceptional charges of £45.7m incurred (FY2014: £25.4m), which cover all balance sheet exposures and all material expected future costs
 Beyond these amounts, we expect no further exceptional charges from either of these businesses Well positioned for the long-term
 Order book remains healthy and now stands at £8.5bn (March 2014: £8.7bn); 98% of 2014/15 budgeted revenue secured (prior year: 99%) and 72% of 2015/16 forecast revenue secured (prior year: 74%)
 Bid pipeline has grown by 20% to £9.8bn (March 2014: £8.2bn) and continued investment being made in the bidding, strategic sales and operational management capability across the group
 Robust balance sheet and strong financial position will support growth Ruby McGregor-Smith CBE, Chief Executive of Mitie, commented:
“We have delivered a strong performance in our facilities management business during the first half of the year, and we expect to gain further positive momentum through the rest of the year.
“We have significantly de-risked our group by finalising the exit from our loss-making businesses. We are focused on investing in and maximising the long-term growth potential of our facilities management, property management and healthcare businesses.
“Our order book and sales pipeline are substantial. We are in a good position to deliver growth and look ahead with confidence.”