Mitie reports a 'strong financial performance' in FY22 results - FMJ
Mitie reports a 'strong financial performance' in FY22 results - FMJ
Abstract
This was boosted by new contract wins, renewals/extensions and projects of approximately £3.8bn total contract value, as well as good growth at Interserve Facilities Management with 90% of contracts renewed in the period and cost synergies of £30m, and £448m from flexible rapid-response Covid-related contracts. Operating profit before other items, from continuing operations was £167m in FY22, up 184% with higher operating profit margin of 4.2% due to the contribution from the higher margin, short-term Covid contracts. Our underlying business performed well in the year, growing 14%. "Our strategy - focused on accelerating growth, enhancing margins and improving cash generation - is creating a strong platform to further improve earnings. Our robust balance sheet and significant free cash flow allowed for continued investment in high return acquisitions across decarbonisation, telecoms maintenance, and intelligent security. Two further telecoms maintenance businesses were acquired early in FY23 and we have entered into a Sale & Purchase Agreement for Custom Solar, a solar power solutions company."Underpinning our strategy is our 'Science of Service' offering, which we launched in the final quarter of FY22. Our technology is a key driver of both our new contract wins including projects - up to £2.1bn TCV in the year - and our high renewals rates - 90% in the period. "As part of our strategic focus on long-term value creation, our revised medium term capital allocation policy will focus on investments in high margin bolt-on acquisitions, whilst increasing shareholder returns. The Board is recommending a reinstatement of the final dividend of 1.4p and Mitie will now commence an initial £50m share buyback programme."The current year has started well, with significant contract wins from Hammerson, Netflix, Poundland, and Primark as well as renewals/extensions of our contracts to support military bases in Cyprus, Ascension Islands, and the Falklands. This new business momentum, together with a full year's contribution from significant contract wins including FDIS and BAE and the uptick in Government projects and variable works, gives us confidence in our growth outlook. As a result, in FY23, after excluding the £448m Covid related contract work that was delivered in FY22, we expect to deliver mid to high single digit revenue growth, together with good operating margin progress.