Mitie increases full year guidance

Mitie’s performance for for the six month period ending 30 September 2022 has been strong, according to the Group’s half year results.

The Group says revenue was £1,923 million as a result of new contract wins and and recent acquisitions which more than offset the boost in the same period last year from short-term Covid-related contracts (H1 FY22: £1,912 million). A total contract value of £1.5 billion has been added during H1, with renewal rates over 90 per cent and a book to bill ratio of 107 per cent.

Excluding short-term Covid-related contracts, revenue grew 16 per cent, reflecting good momentum across all divisions and effective management of inflationary pressures.

Operating profit before other items was £68.0 million, down 20 per cent (H1 FY22: £85.3 million), and operating profit margin before other items was 1.0ppts lower at 3.5 per cent (H1 FY22: 4.5 per cent was boosted by higher margin short-term Covid-related contracts).

Mitie also reports it has returned £70 million to shareholders with the completion of £50 million share buyback and £19.5 million of dividend payments. It has also increased the interim dividend by 75 per cent to 0.7p per share and has announced a £10 million Winter Support package for H2 to help its colleagues manage the rising cost of living.  

Guidance for the full year has been increased with operating profit before other items expected to be at least £145 million.

Commenting on the first six months of the year, Phil Bentley, Group Chief Executive, said: “Our strong performance in the first six months of the year reflects good underlying momentum across all divisions. New contract wins, recent acquisitions and pricing have more than replaced the short-term revenue boost from Covid-related contracts in the first half of last year. Our strategy is delivering underlying revenue growth and cost savings from our margin enhancement initiatives, whilst inflationary pressures are being carefully managed.

“In the first six months of the year we have invested £19 million in three fast growing, high margin businesses and, looking forward, we continue to see opportunities to invest in future growth through ‘bolt-on’ acquisitions. We returned £70 million to shareholders via the share buyback programme and the FY22 final dividend, and are increasing our interim dividend to 0.7 pence per share. 

“As always, we owe our 68,000 colleagues huge thanks for their hard work across all our contracts, including the mobilisation of a record number of new contracts in the first half of this year. We continue to be focused on ensuring Mitie is an ‘employer of choice’ by providing a market leading employee benefits package. With the current cost-of-living crisis, a number of initiatives focused on supporting our lower paid colleagues are being launched in the second half. 

“Although inflationary pressures will continue into the second half, historically our second half performance is stronger, with increased revenues from projects, seasonal winter work, and the ramp-up of margin enhancement savings coming through as the year unfolds. We therefore expect to deliver operating profit before other items of at least £145 million for FY23.”