FACILITIES MANAGEMENT (FM) and security solutions specialist Mitie Group has just issued its latest set of financials, in turn reporting on an “encouraging” period in which “steady progress” is being made on growth strategy delivery, while the integration of the Interserve FM business is now almost complete.
Revenue stands at £1,912 million. That’s up 103% (H1 FY21: £943 million). This figure has been boosted by the inclusion of Interserve Facilities Management revenues of £629 million and £259 million from short-term COVID-related contracts. Mitie’s standalone revenue (excluding Interserve) has risen by 36%, with underlying revenue back at pre-COVID levels.
Operating profit is recorded at £85 million. That represents a 367% increase (H1 FY21: £18.2 million) as the strong revenue growth translated into higher margin profit. An operating profit of £60 million (H1 FY21: £6.6 million) is reflective of a “stronger performance” this period, partially offset by the increased investments in Project Forté and Interserve within ‘Other Items’. Interserve is said to be “performing well”. £12.1 million of cost and revenue synergies have been achieved in H1 FY22.
New contract wins, renewals and projects in H1 FY22 of approximately £1.8 billion total contract value (H1 FY21: £500 million) are reported alongside improved free cash flow of £86 million due to increased profitability (H1 FY21: £78 million) and benefits realised from HMRC’s Time To Pay scheme.
A new revolving credit facility (circa £150 million) is in place. The interim dividend of 0.4 pence per share is now reinstated as underlying Group performance returns to pre-COVID levels.
Strengthened balance sheet
Phil Bentley, Mitie Group’s CEO, has commented on this latest set of financials. He stated: “We have delivered a strong performance in H1 across all of our divisions as the addition of Interserve Facilities Management and the contribution from COVID-related contracts boosted the performance of our business. We’re beginning to generate good free cash flow, while our new long-term financing arrangements reflect our strengthened balance sheet. With our underlying business now back to pre-COVID levels, we have reinstated our interim dividend.”
Bentley continued: “Our new strategy of focusing on growth, enhancing margins and improving cash generation is progressing well. Our ‘Science of Service’ offering is gaining traction as clients’ workspaces require more intelligent security and critical asset monitoring. We hope to add to our recent acquisitions such as the recent deal involving Esoteric.”
Further, Bentley observed: “Our second half is traditionally a little stronger than the first half of any given year as the final quarter attracts additional project works across the public sector. Excluding our short-term COVID-related contracts, which we expect to significantly reduce in the second half, we are again expecting a stronger second half performance for the underlying business. This will result in an operating profit before other items for FY22 of between £145 million and £155 million, which is unchanged from previous guidance.”
Business Services performance
The Business Services division encompassing Mitie’s security operation experienced revenue growth of 74% to £775 million, including £245 million of revenue (H1 FY21: £30 million) from UK Government short-term COVID-related contracts and the addition of contract revenues from Interserve’s former business and industry division. Revenue excluding both Interserve and COVID-related contracts was 9% ahead of the same period in FY21.
Operating profit iss 212% ahead at £65.2 million and supplemented by short-term COVID-related contracts Up to £612m Total contract value for new, renewed or extended contracts is up to £612 million on a 91% retention rate and with project wins accounting for £197 million. As reported by Security Matters, the acquisition of leading technical counter surveillance measures specialist Esoteric was completed on Wednesday 17 November.
Business Services has continued to provide a significant level of support to the UK Government in its ongoing fight against COVID-19. Since these contracts began back in June 2020, Mitie has mobilised 170 COVID Testing Centres in addition to 103 mobile sites, with 13 million members of the public tested at those locations. Further security-related solutions are being provided in support of quarantine and immigration services.