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Mitie has reported record revenues of £4,055m in its full year results for the 12 month period ending 31 March 2023, with wins, renewals, acquisitions and inflationary contract re-pricing more than offsetting contracts that were not renewed. It also revealed total contract value of £4.3bn were awarded in FY23 with renewal rates remaining over 90 per cent.
Operating profit before other items was £162m – an operating profit margin of 4.0 per cent compared to 4.2 per cent in 2022, where this was boosted by higher margin Covid work. Excluding Covid work, revenue and operating profit before other items for FY23 increased by 14 per cent and 44 per cent respectively.
Commenting on the results, Phil Bentley, Group Chief Executive, said:
“Mitie’s performance in FY23 has surpassed the Board’s expectations. We entered the year with the challenge of replacing almost £450m of short-term and higher margin Covid-related contract revenue. Thanks to the hard work of our 64,000 colleagues and our technology-led approach, we have achieved this, and more.
“Group revenue in FY23 exceeded £4bn for the first time, reflecting good momentum from our new contract wins, renewals and extensions, alongside contributions from contract re-pricing and acquisitions.”
He added:
“Our operating margin excluding Covid work of 3.8 per cent reflects growth in projects work and the focus on margin enhancement initiatives. We expect to deliver an additional £5m of Interserve synergies, and therefore increase our guidance for total synergies to £55m by the end of FY24, significantly ahead of our initial expectation of £30m at the time of acquisition.
“Mitie has been transformed over the last six years, and we have made further significant progress this year against each of our strategic pillars. We are now the largest facilities management business in the UK, and our unrelenting ambition is to drive the business to reach its full potential, not just financially but also through its positive contribution to the environment and society.”
“Since the start of the year, we have won and extended a number of significant new contracts and we have a healthy pipeline of new opportunities, combined with the full year benefit from major contracts won and extended in the final months of FY23.”
During FY23, Mitie was awarded new contract wins of £1.9bn, which included contracts with Dublin Airport, the Department for Work and Pensions (DWP), Hammerson, the Home Office, Lloyds Banking Group, National Air Traffic Services (NATS) and National Grid. It was also retained as the strategic partner to the Ministry of Defence (MOD) for its overseas military base in Cyprus and the Landmarc ‘Training Estates’ contract.
Said Bentley: “We will continue our disciplined approach to bidding for contracts, even if it is challenging to maintain renewal rates at the current level, and we will continue to seek growth opportunities, both organically and through strategic bolt-on acquisitions in the decarbonisation, security technology and telecoms infrastructure sectors. We have already completed two acquisitions in FY24, both of which strengthen our capabilities as the UK’s leading intelligence and technology-led security provider.
“We also expect to deliver further progress in FY24 on our ongoing programme of margin enhancement initiatives, including increased synergies from the Interserve acquisition, and efficiencies across our labour, third-party and overhead cost base, which will more than offset inflationary headwinds.
“This positive momentum carried forward into the new financial year gives the Board confidence in meeting its growth expectations for FY24. Mitie is cash generative and has a strong, stable, and flexible balance sheet to support increased returns to shareholders and future growth opportunities.”
