Mitie Group Chief Executive Phil Bentley has hailed the facilities management company’s ‘front-line heroes’ in the FM contractor’s results for the year to March 2021.
He said that the financial year was ‘a defining year’ for Mitie and completed the firm’s four year transformation. The plc’s profit was £63.4m, some 26 per cent lower than the £86.1m of the previous year as profit from contract wins, inclusion of its November acquisition of Interserve and associated £6.2m of synergies was more than offset by the impact of the covid pandemic on trading, the report said. Creation of a single management team in Cleaning and Security and other operational management changes resulted in cost savings.
Intriguingly for a FM provider, Mitie is rationalising its own property through the acquisition; for instance it’s going to leave the Interserve office in Birmingham, Ingenuity House, and move to a smaller Midlands ‘hub’, by November.
Within the business services arm of Mitie, security revenue went up by 18.9 per cent, to £668.8m, while cleaning revenue rose only by 2.6pc, to £349.5m. While the number of employees rose, the order book went down by a tenth.
While sales activity is picking up, it continues to be lower than pre-pandemic, the results report said. Contract extensions from long-standing clients included a seven-year contract to provide FM services for 70 Scottish Government sites.
Bentley said: “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.
“I am so proud of our 65,000 front-line heroes who have gone to work every day throughout the pandemic, delivering exceptional customer service and keeping Britain’s vital infrastructure – hospitals, schools, supermarkets, manufacturing plants and some of Britain’s most strategic assets – clean, safe and properly maintained. An unprecedented 30,000 of our colleagues recently completed our annual employee engagement survey which saw an impressive 9ppt improvement.
“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 per cent lower than the prior year. The second half of the year was significantly better than the first half, with 6.5pc year on year growth, as variable projects and discretionary spend works picked up and cleaning and security demand increased.
As for the contractor’s acquisition of rival FM firm Interserve Facilities Management, it’s performing better than expected, according to the report. Bentley said: “Interserve is performing strongly as part of Mitie and we have successfully renewed or extended all major Interserve contracts that were due for renewal.” The firm also realised £6.2m of synergies in the financial year and has identified additional cost synergies to take its forecast of those synergies from £35m to £42m by the end of the 2023 financial year, he added.
“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 per cent, 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 reoccupation 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 4.5pc to 5.5pc, sustainable free cash flow and ROIC in excess of 20pc.”
The contractor employs some 75,000 people: its services covers technical (Engineering, Energy, Water and Real Estate), business (Security, Cleaning and Offices) and specialist (Care and Custody, Landscapes and Waste Management).
As for the pandemic, the contractor mobilised three Nightingale Hospitals and has stood up over 200 testing centres. As for the outlook, while the company acknowledges that businesses are slowly starting to reopen and the world of work post-pandemic is changing, it says it’s well positioned, with good performance in retention and new business wins.
Leaving out revenue from Interserve, Mitie revenue for the year was £2,139m, 1.6 per cent lower than the year before, which the firm put down to a decline in ‘variable and discretionary projects’, due to building closures or lower occupancy.
