This year has been a “defining year” for Mitie with the company completing its four year transformation programme based around the four pillars of Customer, People, Technology and Balance Sheet/Cost, and upholding “good trading resilience” through Covid-19.
In the group’s FY results for the 12 months to 31 March 2021, revenue, including share of joint ventures and associates, from continuing operations and, including a four-month contribution from Interserve, was £2,589m, an increase of 19.1% compared to the prior year. Excluding the contribution from Interserve, revenue was £2,139m, 1.6% lower than the prior year as variable and discretionary projects declined due to building closures or lower occupancy.
Operating profit before other items of £63.4m (FY20 £86.1m) was impacted by revenue mix and reduced project work due to the pandemic. The company reported a stronger second half with revenue growth of 6.5% versus the previous year as a result of a stronger performance from Technical Services, where projects and variable works saw an uplift in demand, combined with a very strong final quarter of the year from Business Services.
Mitie’s order book, as at 31 March 2021, was £7,202m, including £3,157m from Interserve. Mitie stated that many contracts due to renew in FY21 were “extended temporarily”, reducing the number of new, longer term opportunities. However, overall win rates were at 70%, the highest level in the last four years, with retenders and extensions at 96%. All the major Interserve contracts that came up for renewal under Mitie have been renewed or extended.
Interserve was acquired by Mitie on 30 November 2020 and contributed four months of trading from 1 December 2020 to 31 March 2021 to Mitie’s FY21 results. Mitie reported that the integration of Interserve Facilities Management into the business is performing better than expected, accelerating value creation.
The group’s outlook for FY22 is anticipated to be materially ahead of its prior expectations.
Phil Bentley, Chief Executive of Mitie, commented: “FY21 was a defining year for Mitie and completes our four year transformation. The Group showed great resilience during the Covid pandemic; we strengthened our balance sheet; and the Interserve acquisition is performing well. Mitie is now the market leading provider of intelligent technology-led facilities management, with a clear pathway to deliver growth and sustainable free cash flow.
“Although COVID has challenged us all, our business has been far more resilient than we originally expected, with revenue, excluding the contribution from Interserve, just 1.6% lower than the prior year. The second half of the year was significantly better than the first half, with 6.5% year on year growth, as variable projects and discretionary spend works picked up and cleaning and security demand increased.
“Interserve is performing strongly as part of Mitie and we have successfully renewed or extended all major Interserve contracts that were due for renewal. We have also realised £6.2m of synergies in FY21 and have identified additional cost synergies to take our forecast run rate from £35m to £42m by end FY23.
“Mitie has been transformed over the last four years. Our focus on delivering great service, backed by our technology offering, has resulted in our highest ever customer net promoter score of +50 ppts and all-time high contract renewal rates of 96%, complemented by significant new customer wins.
“As businesses slowly start to reopen and our customers’ employees return to offices, we are starting to see some green shoots of recovery in the variable project and discretionary spend works and we anticipate this continuing as re-occupation plans solidify. With some high-quality new contract wins, short-term support to the public sector and additional synergies from the integration of Interserve, we now anticipate FY22 will be materially ahead of our prior expectations.
“The transformation of Mitie and the acquisition of Interserve has created a strong base from which Mitie is well positioned to prosper. Our new strategy will focus on increasing growth, margin enhancement and cash generation. The new Mitie will target, over the medium term, mid single digit revenue growth, margins of 4.5-5.5%, sustainable free cash flow and ROIC in excess of 20%.”