CONTRACT TO FIX UNSAFE BUILDINGS

As of 30 January, developers have received a six-week deadline, set by government, to sign legally binding contracts that will commit them to pay to repair unsafe buildings.

The government has warned that companies who fail to sign and comply with the terms of the contract will face significant consequences.

Legislation will be brought forward in the spring giving the Secretary of State powers to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.

The contract, which has been drawn up by the Department for Levelling Up, Housing and Communities, will protect thousands of leaseholders living in hundreds of buildings across England, who would otherwise face costly repairs for serious safety defects, including non-cladding related issues.

Under the contract, developers will commit an estimated £2 billion or more for repairs to buildings that are 11 metres or above which they developed or refurbished over the past 30 years. This means that together with the Building Safety Levy, industry is directly paying an estimated £5 billion to make their buildings safe. The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.

Mitie on track to meet full year expectations

In its latest trading update for the three-month period ended 31 December 2022 (Q3 FY23), Mitie says it has delivered an encouraging performance in the third quarter of the year, with revenue growing sequentially each quarter during FY23.

Third quarter revenue, including share of joint ventures and associates, of £1,005m was three per cent ahead of Q2 FY23 (£978m), and six per cent ahead of Q1 FY23 (£945m). This growth reflects increased project revenues across a number of Mitie’s Central Government and Defence and Technical Services contracts, together with the contribution from acquisitions and contract wins in Technical Services, and effective pricing of cost inflation.

Q3 FY23 revenue was in line with the same period last year (£1,008m), and underlying revenue grew by 12 per cent when the £109m of revenue from short-term COVID-related contracts is excluded from Q3 FY22.

New wins and renewals of £163m total contract value (TCV) in the quarter were lower than usual, however Mitie reports that there are a number of client decisions on major new opportunities expected in the fourth quarter. Total year-to-date new contract wins and renewals were £1.7bn. The renewal and extension rate remained above 90 per cent.

Looking ahead, Mitie says it expects revenue momentum to continue over the balance of the year, albeit at a slower pace as the company laps contracts won late in FY22. Mitie adds that Q4 is typically its strongest quarter, as project work increases, and it completes seasonal winter work in Landscapes.

The Board is confident that the full year results will be consistent with the recently upgraded guidance for operating profit before other items of at least £145m.