Interim Results - Pre-tax Profit Up 33.3%

MITIE Group PLC 17 January 2000 MITIE Group PLC INTERIM RESULTS FOR THE 6 MONTHS' PERIOD ENDED 30 SEPTEMBER 1999 STRONG GROWTH CONTINUES * Pre-tax profit up 33.3% to £8.4m (1998 - £6.3m) * Turnover up 28.3% to £162.3m (1998 - £126.5m) * Interim dividend per share up 28.6% to 0.9p (1998 - 0.7p) * Earnings per share up 25.0% to 3.5p (1998 - 2.8p) * Margin improvement sustained David Telling, Chairman, reports 'We continue to grow consistently through our determination to be the best service provider. The second half of the year is proceeding well and I am confident that we will maintain our progress.' Notes: MITIE: Management Incentive Through Investment Equity. ACTIVITY: MITIE Group provides Support and Building Services to the owners and occupiers of commercial and industrial premises. FOR FURTHER INFORMATION: On 17 January 2000 David Telling, Tel: 0171 772 1000 Chairman, MITIE Group PLC John Urquhart, PR & Marketing, MITIE Group PLC at Merrill Lynch International Corporate Broking Subsequently - MITIE Group PLC, Head Office Tel: 01934 862006 MITIE Group PLC INTERIM RESULTS The following are the results for the six months ended 30 September 1999, together with figures for the same period in 1998. Six months Six months Year to 31 to to March 30 30 1999 September September (audited) 1999 1998 (unaudited) (unaudited) £000's £000's £000's Group turnover 162,274 126,496 264,455 Operating profit 8,483 6,304 14,630 Net Interest (paid)/received (47) 42 (122) Profit before taxation 8,436 6,346 14,508 Taxation (2,777) (2,101) (4,676) Profit after taxation 5,659 4,245 9,832 Minority interest (982) (506) (1,134) Profit for the period 4,677 3,739 8,698 Dividend (1,229) (946) (2,166) Retained profit 3,448 2,793 6,532 Earnings per share* 3.5p 2.8p 6.5p Diluted earnings per share* 3.4p 2.8p 6.5p Dividend. The Board has declared an interim dividend of 0.9p per Ordinary Share (1998: 0.7p). The dividend will be payable on 30 March 2000 to all shareholders registered on 10 March 2000. *Earnings per Share. The calculation of basic and diluted earnings per share using the principles of FRS 14 is based on the profit attributable to holders of Ordinary Shares. The weighted average number of Ordinary Shares in issue for the period was 135,485,546 (1998: 132,606,633) and fully diluted 137,671,389 (1998: 133,899,985). The figures for the year to 31 March 1999 have been extracted from the full accounts for the year which received an unqualified auditor's report and which have been lodged with the Registrar of Companies. A copy of this statement will be posted to all shareholders and will be available to members of the public from the Company's Head Office: The Stable Block, Barley Wood, Wrington, Bristol BS40 5SA. MITIE Group PLC INTERIM RESULTS Summary Group Balance Sheet At 30 At 30 At 31 September September March 1999 1998 1999 (unaudited) (unaudited) (audited) £000's £000's £000's Fixed assets Intangible assets 3,268 960 2,367 Tangible assets 36,272 24,680 30,672 25,640 39,540 54,321 33,039 Current assets (51,442) Creditors (amounts falling due 70,787 65,536 within one year) (73,939) (64,718) Net current (3,152) 2,879 818 (liabilities)/assets Total assets less current 36,388 28,519 33,857 liabilities (494) (5,509) (4,451) Creditors (due after more than (1,188) (625) (1,092) one year) Provision for liabilities and charges Net assets employed 34,706 22,385 28,314 Capital and reserves Called up share capital 6,826 6,698 6,761 Share premium account 6,749 4,676 5,222 Other reserves (552) (556) (552) Profit and loss account 14,640 7,453 11,192 Equity Shareholders' funds 27,663 18,271 22,623 Minority interest 7,043 4,114 5,691 34,706 22,385 28,314 MITIE Group PLC INTERIM RESULTS Summary Group Cash Flow Six months Six months Year to to to 31 March 30 30 1999 September September (audited) 1999 1998 (unaudited) (unaudited) £000's £000's £000's Net cash inflow from operating 9,239 11,611 23,230 activities Returns on investments and (81) (108) (25) servicing of finance Taxation (paid)/received (297) 44 (3,632) Capital expenditure (9,535) (6,293) (13,203) Acquisitions (134) (174) (3,044) Equity dividends paid - - (1,877) Net cash (outflow)/inflow (808) 5,080 1,449 before financing Issue of share capital 1,000 823 1,785 Cash inflow/(outflow) from 5 (198) (85) increase/(decrease) in debt 197 5,705 3,149 Reconciliation of net cash flow to movement in net debt: Increase in cash in the period 197 5,705 3,149 Cash (outflow)/inflow from (5) 198 85 (decrease)/increase in debt New finance leases (111) (291) 10 Movement in net debt in the 81 5,612 3,244 period Opening net funds/(debt) 2,700 (544) (544) Closing net funds 2,781 5,068 2,700 MITIE Group PLC INTERIM RESULTS Summary Group Cash Flow Continued Six months Six months Year to to to 31 March 30 30 1999 September September (audited) 1999 1998 (unaudited) (unaudited) £000's £000's £000's Reconciliation of operating profit to operating cash flows: Operating profit 8,483 6,304 14,630 Depreciation 3,986 2,691 5,888 Amortisation of goodwill 60 - 34 Profit on sale of tangible (110) (258) (401) fixed assets (Increase)/decrease in work in (4,969) 3,234 (9,786) progress and debtors Increase/(decrease) in 1,789 (360) 12,865 creditors Net cash inflow from operating 9,239 11,611 23,230 activities Chairman's Statement Financial Overview. Pre-tax profit for the half year amounted to £8.4m, an increase of 33.3% over the same period last year on turnover up 28.3% at £162.3m. We have made further improvement in margin. Earnings per share increased by 25% to 3.5p (1999: 2.8p). Interim Dividend. The Board has declared an interim dividend of 0.9p per share (1999: 0.7p), an increase of 28.6%. This dividend will be paid on 30 March 2000 to those shareholders on the Register on 10 March 2000. Millennium Compliance. The Year 2000 project completed all critical milestones well within the project time-scale and all the primary business systems have completed the millennium rollover without any issues. Although this critical date has been successfully passed, the Executive Steering Committee is not being complacent in considering the possible impact from latent problems outside the control of MITIE. All disciplines within the Group have made considerable effort in determining the compliance of critical players in our supplier/customer chain and are confident of continued trouble free operation. The Year 2000 project team will remain operational until it is considered that sufficient time has passed for all possible external issues to be identified and resolved. Segmental Analysis. Turnover Pre-Tax Pre-Tax Six months to 30 September £000's Profit Profit 1999 £000's Margin % Building Services 93,849 4,347 4.6 Support Services 68,425 4,090 6.0 Total 162,274 8,436 5.2 Six months to 30 September 1998 Building Services 71,554 3,270 4.6 Support Services 54,942 3,076 5.6 Total 126,496 6,346 5.0 Building Services. The Building Services division is made up of the Mechanical and Electrical Engineering, Property Services, Access Systems and MITIE Lindsay disciplines. It has made further good progress with an encouraging 31.2% increase in turnover. There has been a slight increase in margin giving an improvement in profit of 32.9%. The division continues to perform well after a period of consolidation and investment in both people and resource. Engineering. Within the period reviewed Engineering companies have won major new contracts for HMV, General Electric, Deutsche Morgan Grenfell and BT as well as further work at Bristol and Manchester Universities. Continuing partnerships within the leisure sector with Warner Bros, Cine UK, Showcase Cinemas and Cannon Leisure Clubs provided a valuable base workload across the country, justifying the efforts of senior management to break away from the confrontational attitudes of the construction industry. The fit out market in London and the niche market in retailing continue to provide exciting opportunities for the specialist companies, while the improved performance of the mature businesses is particularly pleasing. Property Services has completed restructuring to provide clients with a full national service in the discipline's core businesses of Painting, Roofing and Project Refurbishment. These activities are now managed from six regional centres and operated through the existing branch network. Many new clients have been added, amongst them Axa Sunlife, Railtrack, Arcadia Group, Westin Hotels and Grampian NHS. Repeat orders have been received from Ministry of Defence, Waitrose, Ryden, Budweiser, Rothmans, Smurfit and Proctor & Gamble. A major new contract with Trillium was won partly on the strength of the good relationship Support Services has established with that client. Access Systems continued to expand its operations on a national basis and has now become a significant player in the industry. MITIE Generation, which hires out and sells access equipment, has opened a new branch in Barking and has added new products to its portfolio. The trend of rentals improved by 31% against the same period last year and remains strong. The scaffold erection and contracting business, MITIE Access, has acquired businesses in the North East and Scotland, and started a company in Leeds. These and the existing business are establishing themselves in a buoyant market environment, but have yet to contribute significantly to profits. MITIE Powered Access has expanded its fleet of machines and is now operating from five locations. Some of the usage is by other MITIE companies and a mutually useful cross-sales exchange has developed, though this is still less than 15% of total sales. MITIE Lindsay has traded well during the period. Work on HMS Ark Royal has been substantial, with all targets met. Work continues on a turnkey basis on the submarines HMS Sceptre and HMS Spartan. A contract has started on the Royal Navy's new hydrographic ship HMS Scott together with refits on HMS Cornwall and the submarines HMS Talent and HMS Tireless. MITIE Access Systems and MITIE Lindsay have together recently completed a major scaffolding contract on the Tamar Bridge. The company has started contracts on two giant cranes for Clydeport at Hunterston and has been supporting GEC Marine in finishing two Malaysian Corvettes and the last Trident Submarine to be built. We have made an encouraging start with our paint removal system, HydroCat, which has been very active in shipyards in the south of England and in Holland. It has global potential in both the marine and petrochemical industries. Support Services. The Support Services division is made up of Cleaning, Catering, Security, Engineering Maintenance and Managed Services. Turnover has grown by 24.5% and pre-tax profit by 33% against the corresponding period last year. The margin has increased from 5.6% to 6.0%. Our newly established Catering and Security companies have performed satisfactorily against budget with Catering being successful in securing a contract for Bath College and another for the Royal Logistics Corps. Cleaning. The satisfactory implementation of the Working Time Directive and the Minimum Wage is a credit to our management and evidence of the close relationship we have with our customers. As unemployment falls and the economy continues to gain strength, staff recruitment and retention, particularly in the South East, is becoming more difficult. However, with the co-operation of our customers and the dedication of our professional managers we will overcome this. Major successes during the period include additional contracts from Rolls Royce for their English plants to add to the already established business in Scotland which means that we now clean all their facilities in the UK. This additional turnover amounts to some £3m. Significant contracts were awarded from Alliance and Leicester, WH Smith, Dunlop, Polaroid and Scottish Widows. A prestigious contract was won for Madame Tussauds and another for Rolls Royce Motors at Crewe. In all, the total value of new contracts awarded was in excess of £14m on an annual basis. Engineering Maintenance. Our Engineering Maintenance discipline has now become firmly established as a serious competitor with operations in the South East, Midlands and the North. Significant contracts were gained during the period with Xerox, Computacenter, Warner Bros, Telewest Communications, the MoD at RAF Stafford and a further contract for BT. Managed Services. MITIE Managed Services undertakes multi- activity contracts and seeks to exploit synergy between different MITIE companies by cross selling. Formed in 1998, it has now established offices in four regional centres from which it directs its Facilities Management contracts. As anticipated in my Chairman's Statement last year, MITIE Managed Services is now working closely with Trillium in quoting for the STEPS contract for the Inland Revenue, reflecting the excellent partnership that has been built with this innovative Property Management company. In addition, MITIE Managed Services has provided consultancy to leading retailers in their quest to streamline their facilities operations. Conclusion. The drive for quality is unrelenting and has been supported by renewed emphasis on management development. We have set up and recently commenced our own MBA Diploma course at Henley Management College. Market research to ascertain our customers' opinions and future needs has been given the highest priority for the current period. Investment in skills training has been substantially increased and most of our companies are now in the final phase of qualifying for Investors in People. We continue to grow consistently through our determination to be the best service provider. The second half of the year is proceeding well and I am confident that we will maintain our progress. DAVID M TELLING Chairman

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