Mitie Q1 FY26 revenue up 10.1% to £1.28bn, record £29bn pipeline

Mitie Group plc (LON:MTO), the UK’s leading Facilities Management and Transformation company, has provided a trading update for the three-month period ended 30 June 2025.

Q1 Highlights

Commenting on the results and outlook, Phil Bentley, CEO, said:

“In the first quarter of our new fiscal year we have maintained strong trading momentum, with double digit revenue growth. Our core Facilities Management offer grew by 7.3%, as we secured and extended a number of key accounts, whilst Facilities Transformation – delivered through client projects work – grew by 12.8%, against a strong prior year comparative.  

“The acquisition of Marlowe, announced in June, represents a key step in our Strategic Plan. Facilities Compliance is an increasingly business-critical need for our customers, and we see significant opportunities to benefit from greater scale in this high growth sector. The overwhelming support from Marlowe’s shareholders reflects the compelling strategic and financial rationale for the Mitie offer, and will enable them to participate in further value creation as Mitie shareholders. We look forward to welcoming the Marlowe team and executing our integration programme, delivering at least £30m of cost synergies and cross selling these high value services to Mitie’s customers.

“With today’s strong update, we remain on track to deliver our ambitious Strategic Plan, pivoting Mitie from being the UK leader in Facilities Management to the leader in technology and project-led Facilities Transformation and, with the acquisition of Marlowe, a leader in Facilities Compliance.”

Revenue growth

Revenue for the period increased by 10.1% to £1,282m compared with the same quarter last year (Q1 FY25: £1,164m), significantly ahead of UK FM market growth of c.3%. This strong performance included organic growth of 8.0% (inclusive of 3.6% pricing), driven by net wins and scope increases on existing contracts, alongside projects work. Infill M&A contributed a further 2.1% of inorganic growth through the prior year acquisitions of Argus Fire, ESM Power and Grupo Visegurity, all of which are performing strongly.

Contract wins and extensions/renewals

During the quarter we won, extended or renewed contracts with up to £1.2bn TCV, following a record outturn in the same period last year (Q1 FY25: £2.0bn), which had included two notable public sector wins totalling c.£0.5bn and the extension of our largest private sector contract.

Notable new wins included IFM contracts for Aviva and Hull University Teaching Hospitals NHS Trust, immigration services for the Home Office, security services for the Metropolitan Police Authority, engineering services for Transport for London and cleaning for Walgreens Boots Alliance.

Notable contract renewals and extensions included AS Watson Group, Central London Community Healthcare NHS Trust, Defence Infrastructure Organisation, Manchester Airports Group, Starbucks, Scottish Parliament and Transport for London (security services).

Q1 FY26 Divisional performance

Business Services

Revenue of £598m was 16.6% better than the same quarter last year (Q1 FY25: £513m), driven by net wins, scope increases, projects (including security systems and other works for Scottish Power and integrated fire & security systems for Google data centres), pricing and the contribution from prior year acquisitions. All sub-divisions delivered good growth yoy, with the exception of Central Government, which reduced by 6.1% due to the completion of certain larger programmes of projects work in FY25. Revenue in our Spanish business grew by 30.8% yoy, reflecting new contract wins, scope increases and the acquisition of Grupo Visegurity.  

Technical Services

Revenue of £466m was 5.0% better than the same quarter last year (Q1 FY25: £444m), primarily driven by prior year wins (including Dublin City University and Great Western Railway), scope increases and projects work (including energy audits for McDonalds, a data centre grid connection for Telehouse West, and the build of a data centre campus in Harlow), offset by one notable public sector contract that was not renewed at the end of FY25.  

Communities

Revenue of £218m was 5.3% better than the same quarter last year (Q1 FY25: £207m), largely reflecting higher projects volumes and lifecycle works across healthcare, local government and education contracts, pricing and net wins (including HMP Millsike and Coventry & Rugby Hospital in the prior year).  

Update on recommended offer for Marlowe plc

On 5 June, we announced the c.£350m recommended cash and share offer for Marlowe plc, a leading business-critical services provider in the fast growing £7.6bn Testing, Inspection and Certification market. The combination establishes a market leading Facilities Compliance platform for Mitie and accelerates the delivery of our Strategic Plan. The transaction has received overwhelming support from Marlowe’s shareholders, who voted 98% in favour of the Court-sanctioned scheme of arrangement on 16 July. All regulatory approvals have also been met.

Subject to the satisfaction or waiver of the remaining conditions set out in the Scheme document, the next milestones will be the Court Sanction Hearing on 31 July 2025 followed by the Effective Date of the Scheme (i.e. completion) on 4 August 2025.

Capital deployments

Our capital deployments are determined by the best use of capital to deliver attractive returns to shareholders and drive growth in the business, while maintaining a strong financial position, and leverage within our 0.75-1.5x target range (post-IFRS 16 average net debt / EBITDA).

In light of the Marlowe acquisition, we have temporarily paused our £125m share buyback programme (launched on 16 April). Within the programme, 2m shares were purchased at a cost of £3m during the period, which are being held in treasury to fulfil the 2022 Save As You Earn scheme. Separately, we also purchased 12m shares at a cost of £15m into our Employee Benefit Trust during the period to fulfil employee incentive schemes.

Mitie has a strong balance sheet and expects to deliver annual free cash flow of £150m by FY27. Following the Marlowe acquisition, we expect leverage to quickly reduce from the top end of our target range in FY26, through good free cash flow generation and increasing profitability.  This will provide further capital deployment opportunities, including the return of surplus funds to shareholders via the recommencement of share buyback programmes. We will maintain our progressive dividend policy (30-40% payout ratio) and continue to pursue infill M&A opportunities that are a good strategic fit for our business.  

Net debt

Net debt at 30 June 2025 was £240m, an increase of £41m from 31 March 2025.  This increase partially reflects an expected seasonal working capital outflow, as we pay our supply chain for the increased volume of project works undertaken in the final quarter of the prior year, as well as the ongoing investment into our projects business. There have also been capital deployments totalling £20m (the share purchases outlined above plus Landmarc dividends) alongside a £1m increase in lease obligations as we continue to transition our fleet to EV. Average daily net debt was £238m (Q1 FY25: £173m).

END

¹ Restated to reflect the changes to divisional reporting effective from 1 April 2024 (first reported in H1 FY25)

^[1] Including share of joint ventures and associates

^[2] Total Contract Value (TCV); including estimates for projects and variable work