Mortice expecting earnings well above forecasts

Security and facilities management company Mortice updated the market on its trading for the 12 months to 31 March on Monday, saying that due to the “strong” performance of the combined existing and acquired businesses, the financial results for the year were expected to be “materially ahead” of current market expectations.

The AIM-traded firm said revenue increased by approximately 35% to $180m, and EBITDA was expected to be “materially above” forecasts of $6.7, which was already higher than the $5.6m reported in 2016.

Its board said that was driven by the increase in revenue as well as greater cost optimisation throughout Mortice, with net debt at year-end of $13.6m, narrowing from $14.5m.

Mortice said it achieved “strong” growth across all parts of the business with facilities management revenues growing approximately 44% to $82m, and security services revenues growing approximately 28% to $97m.

The majority of sales continued to come from India, although overseas sales reportedly increased “substantially” following strong performances from Office & General in the UK - now rebranded Tenon FM - and Frontline Security in Singapore.

Both of those businesses had now been fully integrated into the business and were said to be performing ahead of management's expectations at the time of acquisition.

On the operational front, the company said it continued to add new clients and strengthen existing relationships during the period with key contract wins in India, including J&K Bank, Amazon and Kotak Mahindra Bank, Ocwen Financial Corporation, and Jubilant - each of which was worth in excess of $0.5m per annum.

In the UK, O&G was appointed to London Universities' £60m cleaning framework and strengthened relationships with Amey, CBRE and the University of Arts London.

O&G was now trading under the name Tenon FM as part of a group-wide rebranding initiative focussed on creating a global brand presence, the Mortice board explained.

Since period end, the company completed the £4.5m acquisition of Elite Cleaning & Environmental Services, the board reported.

It said the earnings-enhancing addition further strengthened the company's UK reach, adding a number of blue chip clients to its customer base.

Integration was continuing well, and Elite had added new customers since the acquisition.

Looking ahead, the company said it saw “tremendous scope” for organic and acquisitive growth, both within existing markets and new territories.

Underpinned by high levels of recurring revenue and long-term client relationships, Mortice said it continued to have a “strong” pipeline across all parts of the business and continued to build on the momentum achieved during the period.

“I am delighted by the company's strong performance during the period,” said executive chairman Manjit Rajain.

“We are creating a global footprint and remain extremely excited by the growth prospects across all parts of the business.”