Mitie Group PLC on Tuesday reported strong trading for its first quarter due to revenue generated from new contracts and acquisitions.
The London-based facilities management and professional services company reported a 3.1% increase in revenue to £945 million from £917 million a year prior.
Excluding Covid-related contracts, revenue increased by 16%. The company said revenue from new contract wins and acquisitions has replaced the contribution from Covid-related contracts that has since ended.
Mitie acquired two telecommunications and maintenance companies, 8point8 and P2ML, and solar energy equipment supplier, Custom Energy, in the quarter. ‘These three acquisitions take the total number of acquisitions to seven during the last twelve months, with a combined contribution of £17 million revenue in the first quarter of the year,’ it said.
Further, the company reported contract wins and renewals with a total value of up to £778 million in the first quarter.
New contract wins with US Visiting Forces, Hammerson PLC, Poundland and GSK PLC totalled £203 million. Mitie said its contract renewal rate of 95% saw renewals with companies such as Vodafone Group PLC and Starbucks Corp. In addition, both J Sainsbury PLC and Sellafield have extended contracts in the second quarter.
In terms of divisional performance, business services was down 17% year-on-year as it delivered almost all short-term Covid-related contracts, which have since ended.
Central government and defence revenue increased 16% to £168 million from £145 million a year previous, as a result of three renewed Ministry of Defence contracts.
The group’s communities division revenue increased to £120 million from £109 million a year prior. Technical services revenue increased by 20% to £257 million due to the acquisition of 8Point8 and P2ML, as well as contract wins with BAE Systems PLC and Costa.
Mitie reported specialist service revenue of £96 million, a 16% increase from a year before, which it said was primarily driven by the £10 million increase in the care and custody division.
The company’s net debt stood at £83 million as at June 30, compared to net cash of £27 million at the end of March.
‘We are encouraged by the strong start to the year, which reflects the Group’s strategic focus on accelerated growth. A number of margin enhancing initiatives are in flight which will increase margins in the second half of FY23. Labour and parts inflation remains an issue but is being managed through pricing and other efficiencies,’ said Mitie.
Shares in Mitie were up 1.0% at 74.00 pence in London on Monday
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