Mitie today released its third quarter trading update for the period ending 31 December 2020 and expectations for the full year ending 31 March.
The period covers the group’s takeover of Interserve’s FM arm, which took effect on 30 November.
The statement records strong performance in the third quarter of the year as the Covid-19 lockdown measures were eased. Mitie adds that revenue from providing critical services supporting the UK’s battle against the pandemic increased. But it warns that the national lockdown measures currently in place are likely to result in flat growth in the final quarter of the outsourcing giant's fiscal year.
The group saw Q3 organic revenue of £573.9 million – 6.7 per cent ahead of the same period last year (this is for Mitie only).
Its average daily net debt improved to the net cash position of £31 million (compared with £313 million net debt in the same period the previous year). In the year to date, Mitie gained new contract wins and renewals valued in excess of £770 million.
Interserve FM’s revenue including share of joint ventures and associates for December 2020 of £109.2 million – the first month of ownership in the reporting period – highlighted resilience in many public sector contracts, says the group.
Operating profit before other items for full-year 2020/21 – including the share of joint ventures and associates and four months’ contribution from Interserve – is forecast to be between £57 million and £61 million.
New contracts won during this period included Bravissimo, Magnox, QBE Insurance and Manchester City Council, with contract renewals by Cornerstone Telecoms and expanded contracts with existing customers including Primark, Toyota and Euro Car Parts. Mitie was also appointed to three Crown Commercial Service agreements for vehicle charging infrastructure, heat networks and electricity generation assets and building cleaning.
Mitie Business Services, representing 50 per cent of group organic revenue, reported revenue of £287.1 million – 14.8 per cent ahead of Q3 last year. The main driver of growth was the provision of additional security and cleaning for existing clients, particularly in food retail, logistics and non-aviation transport, as well as supporting the NHS in the battle against Covid-19 and supporting HMRC at ports following the UK’s exit from the EU.
Technical services – 39 per cent of group organic revenue – showed revenue of £226.4 million, some 0.6 per cent lower than the same quarter last year. Overall, Technical Services was knocked the hardest by the pandemic as discretionary variable work and demand for engineering projects “significantly reduced”.
The specialist services division – representing 11 per cent of group organic revenue – brought in revenue of £60.4 million, 0.8 per cent ahead of the same period last year. Care & Custody reported revenue of £28.2 million, up 3.5 per cent as three new contracts began in the period. Waste reported a 2.3 per cent increase in revenue to £20.6 million as variable projects picked up.
Although the performance in Q3 was encouraging, Mitie says the national lockdown measures in place are likely to result in flat growth in Q4. Overall, second-half performance will be stronger than the first half. It adds that acquired Interserve business “is holding up well and synergy benefits are starting to be realised”.
Image credit | Mitie